Global settlement

On 1 May 2022, the Australian Energy Market Operator (AEMO) began using the Global Settlement framework in the National Electricity Market (NEM).

Global settlement, which replaces the ‘Settlement by difference’ method, will change how costs are allocated to retailers and will result in some charges being passed on to customers.

In the FAQs below, we explain the changes and what they mean for CS Energy's retail customers.

What is Global Settlement?

Global Settlement is the new methodology that AEMO will use for allocating costs to retailers in the NEM from 1 May 2022.

Global Settlement will provide a fairer distribution of what’s known as ‘unaccounted for energy’ (UFE) costs across all retailers in the NEM.

UFE is electricity that has been consumed in a local area but cannot be traced to a particular meter.

Examples of UFE include:

• Unmetered load, such as lighting for traffic signals, streets or parks.
• Estimation errors.
• Electrical losses, including transmission losses and electrical theft.

Historically, UFE has been billed to the local area retailer who was the incumbent when the NEM was formed in 1998. Since then, there have been considerable advancements in metering technology and many new retailers have entered the market.

AEMO is introducing to provide a fairer distribution of UFE costs across all retailers.

How will Global Settlement work?

Under a Global Settlement framework every retailer is billed for the loss-adjusted metered electricity that is consumed by their customers within a given area. AEMO will then allocate UFE costs to retailers in that area, pro-rated based on their ‘accounted-for’ energy.

What do the changes mean for customers?

Retailers will pass some of these UFE costs on to customers. The new charges will be based on the amount of UFE in the area the customer’s site/s are located and the customers’ metered energy usage.

The first Global Settlement charge will appear in your June 2022 invoice.

CS Energy will provide further information for our customers in May about the transition to Global Settlement and what it means for your electricity bill.

More information

Contact our Retail team with any questions you have on telephone 1800 950 595 or email retailsales@csenergy.com.au.

Visit the AEMO website to learn more about Global Settlement.