Submission to managing rate of change of frequency draft determination

PIAC responded to the AEMC’s draft determination to the managing the rate of change of frequency rule change. PIAC supports the proposal that AEMO determine a minimum level of inertia for each sub-region and for it to be procured as a regulated service by Transmission Network Service Providers (TNSPs). PIAC considers this is consistent with existing AEMO arrangements and obligations on TNSPs regarding system security. PIAC also supports any inertia procurement over and above this minimum level (such as that procured for market benefits) being a contestable service which will be considered under a separate rule change proposal.

While PIAC acknowledges the interdependency of measures that contribute to system reliability and security, it is critical to consider consumers’ actual willingness to pay for any higher levels of reliability when making system changes and reforms. Accordingly PIAC recommends that any new rules should ensure that the minimum level of inertia identified for each sub-region by AEMO, and the cost of procurement by TNSPs, reflects consumer preferences regarding cost-reliability trade-offs.