On 13 March 2025, the Australian Energy Market Commission (AEMC) published a final determination and rule in response to a rule change request from the Australian Energy Market Operator (AEMO). The rule better aligns one element of the 2022 Primary frequency response (PFR) incentive arrangements rule with recent reforms to non-energy cost recovery and enables cheaper implementation.

The final rule is consistent with AEMO’s proposed rule, with minor drafting differences to improve clarity. It revises two definitions to clarify the process for allocation of frequency performance payment (FPP) and regulation Frequency Control Ancillary Services (FCAS) costs under the new FPP arrangements.

The final rule commences with the FPP arrangements on 8 June 2025.

Further information on AEMO’s implementation of the FPP arrangements is available here. 

Background

On 4 October 2024 the AEMC received a rule change request from AEMO to amend the National Electricity Rules (NER) to allow for a cheaper implementation of the new FPP arrangements.

On 16 January 2025 the Commission published a consultation paper and commenced consideration of the rule change request through an expedited rule change process. Objections to the expedited process were due on 30 January 2025, with no objections received. Submissions to the consultation paper closed on 13 February, with one submission received, from the rule change proponent, which was supportive of the proposed change. This submission can be found below.