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

Timing	Element	Summary
4 May 2023	Primary Frequency Response Requirements (PFRR) Procedure	Final procedure has been published, following consultation. Procedure covers: Requirement to provide Primary Frequency Response (PFR) PFR parameters and additional performance requirements
1 June 2023	Frequency Contribution Factor Procedure (FCFP)	Final procedure has been published, following consultation. The FCFP, covers: The calculation of a generating unit’s impact on system frequency and the associated payment Determination of the need to raise or lower power system frequency.
July 2023	Participant Impact Assessment	High level view on participant impacts of FPP.
December 2023	High – level technical design	Detail regarding FPP reporting to enable participants to scope their own requirements, begin engagement with developers/vendors and provide feedback to AEMO.
April 2024	Data model technical specification update - Reporting	Updated participant data model, containing new Frequency Performance Payments (FPP) data reporting.
September 2024	Data model technical specification update – Settlements	Updated participant data model, containing new elements for FPP settlements.
December 2024 to May 2025	Non-financial operation of new FPP systems	Extended period of non-financial operation of the new FPP system to allow market participants to familiarise themselves with its operation.
8 June 2025	Frequency Performance Payments Go Live	New FPP arrangements replace existing ‘causer pays’ arrangements.