PIAC responded to the Australian Energy Market Operator’s (AEMO) draft methodology for the 2022 Integrated System Plan (ISP). We generally support AEMO’s proposed ISP methodology, but recommend improvements relating to the purpose of the ISP and AEMO’s role in delivering it, scenario weightings, and generator retirements.
The ISP is intended to be ‘a whole-of-system plan that efficiently achieves power system needs through that transformational period, in the long-term interests of the consumers of electricity’. Achieving this requires a commitment to impartiality and evidence and the ability to withstand political pressures, particularly as major interventions from state and federal governments increase.
We recommend AEMO should seek to uphold the long-term interest of consumers against interventions where they are not in the consumer interest. It should ensure its development of the ISP does not take as given government projects or plans that are uncommitted and/or unlikely, irrespective of their political popularity. AEMO’s analysis should reveal, rather than cloud, the cost to consumers of NEM interventions, with counterfactuals including baselines, scenarios and sensitivities that are absent of interventions.