PIAC made a submission to the Australian Energy Market Commission (AEMC) regarding a rule change to allow market participants affected by intervention events to be compensated for Frequency Control Ancillary Services (FCAS) losses.
PIAC broadly supports improving the consistency, transparency, predictability and efficiency of compensation mechanisms for participants and scheduled loads affected by intervention events, however, we are concerned this rule change may result in considerable increased costs for consumers as it introduces a new type of compensation. In light of this we recommend further examination of the likely costs of this rule change be undertaken.
We stress any compensation process should be transparent and consistent, reduce unnecessary costs to consumers, allocate risks to those best placed to manage them and costs to those who benefit from them, and not discourage the adequate provision of necessary market services.
We stress interventions by AEMO, and any compensation for them, should not discourage other market mechanisms, such as demand response, which may achieve similar outcomes at a lower cost to consumers.