Frequency Performance Payments project

Background

On 8 September 2022, the Australian Energy Market Commission (AEMC) published a final determination and a final rule to amend the existing provisions for the allocation of costs (often referred to as ‘Causer Pays’) relating to regulating raise services and regulating lower services as well as implementing a new incentive framework for the provision of Primary Frequency Response (PFR).

AEMO uses Regulation Frequency Control and Ancillary Services (FCAS), to make relatively small adjustments to the supply and demand balance in the electricity system.

Under the current Causer Pays framework, electricity generators are assessed based on the relative unhelpfulness of their impact on the power system frequency.

Causer Pays recovers Regulation FCAS costs from those electricity generators who have an overall negative impact on the power system, while those who do not have a negative impact avoid paying any costs.

Scope

The new rule creates a system of positive and negative Frequency Performance Payments (FPP), which will give market participants information on their frequency performance and its dollar value (or cost).

Under the new arrangements, generation units’ performance and five-minute Contribution Factors (CF) calculated for FPP will be used to allocate the recovery of Regulation FCAS costs. 

There are two key implementation dates:

• 8 June 2023: The “Frequency Contribution Factors Procedure” published (replacing the existing Regulation FCAS Contribution Factors Procedure).
• 8 June 2025: The commencement date for the rule replacing the current Causer Pays system.

Frequency Contribution Factor Turning Parameters and Input Sources

Following stakeholder consultation, the final Frequency Contribution Factors Procedure has been completed and is published here

The Frequency Contribution Factor Tuning Parameters and Input Sources, including weightings for Frequency Measure and the details on where frequency will be obtained are published here.

Timeline

Industry engagement

This initiative forms part of NEM Reform Program and market participants can get involved by visiting:

Reference information

Further information

For more information, please contact FPPconsultation@aemo.com.au.