On 15 October 2009, the AEMC gave notice under section 102 of the National Electricity Law (NEL) of making its final Rule determination. The final Rule determination provides the AEMC’s reasons for determining to not make the proposed Participant Derogation.

Background

On 23 December 2008, Hydro Tasmania lodged a Rule change proposal for a Participant Derogation in relation to the recovery of the costs of local frequency control Market Ancillary Services in Tasmania.

In 2008 the Reliability Panel reviewed the Tasmanian Frequency Operating Standards. The changes made by the Reliability Panel may lead to an increased requirement for some types of frequency control Market Ancillary Services in Tasmania. Hydro Tasmania considers that the increased costs of these Market Ancillary Services should be recovered from those Generators that could not have met the Tasmanian Frequency Operating Standards that applied prior to the Reliability Panel's review in 2008.

On 29 January 2009 the AEMC published a notice under section 95 of the NEL to commence the initial consultation on the Rule change proposal. The AEMC invited interested parties to provide written submissions by 13 March 2009.

On 21 May 2009, the AEMC published a notice under section 107 of the NEL. The notice extended the time for making the draft Rule determination to 13 August 2009.

The AEMC concluded it was necessary to extend the timeframe in order to allow time to properly consider new and complex issues relevant to the Rule change proposal. These issues arose from:

• information provided by Hydro Tasmania about the basis for stating that it would cost $3.5 million per annum for Hydro Tasmania to provide the additional 6 second raise market ancillary services;
• further amendments to Hydro Tasmania's original Rule change proposal; and
• advice from NEMMCO to the market that from 21 May 2009 it will change the calculation method used to determine Tasmanian market ancillary service requirements, including inertia and demand impacts (see NEM Communication No. 3379 - 18 May 2009).

The AEMC invited interested parties to provide relevant written observations about the additional information provided by Hydro Tasmania, particularly in the context of NEMMCO's revised approach to calculating Tasmanian market ancillary service requirements by 15 June 2009.

On 30 July 2009, the AEMC gave notice under section 99 of the NEL of the making of its draft Rule determination.  The draft Rule determination provided the AEMC's reasons for determining to not make the Participant Derogation proposed by Hydro Tasmania. The AEMC invited stakeholders to make submissions in response to its draft Rule determination by 11 September 2009. The AEMC received four submissions.