New AEMC rule to increase transparency of emerging power system security risks

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The AEMC is changing the way the market operator and network service providers assess the kind of risks that could lead to cascading outages or major supply disruptions in the power system.

A new rule announced today will better identify emerging risks to power system security. It follows a request from the former COAG Energy Council energy ministers to change the rules in the wake of the AEMC’s 2019 Review into the black system event in South Australia. 

“System security is a priority area for the Commission and this new rule gives us an extra tool in the toolkit to identify and consider the risk of unforeseen events,” AEMC Chair Anna Collyer said.

“Promptly identifying and assessing risks to the security of energy supply can also reduce both direct and indirect costs to consumers.

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“This new rule will increase the transparency of emerging system security risks that may need to be managed, helping AEMO, network service providers and other market participants better understand the nature of new risks and monitor them over time. This is particularly important as the energy market transitions to a different future with a changing generation mix.”   

The rule introduces a new, more holistic, general power system risk review (GPSRR). This annual review will replace the existing power system frequency risk review (PSFRR) which currently occurs about once every two years. 

As well as occurring more frequently the new review will have an increased scope, looking at a wider set of risks beyond frequency risks. However, the new approach is not intended to be a detailed assessment of all potential risks. Instead, AEMO and network service providers will collaborate on a high-level view of risk arrangements over time.

“A key element of the new review is the requirement for providers to collaborate with AEMO and ensure the operator has the information it needs to conduct these risk reviews,” Ms Collyer said.

“As well as monitoring risks over time, the new approach will help AEMO and network service providers improve their capacity to identify, understand and consider ways to mitigate against those risks. Working together more often raises the profile of risk identification across an already highly-aware industry.”

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One more power system frequency risk review will be completed in this transition period, with the first of the new reviews to be delivered by  mid-2023.

The process of considering the new review was extended earlier this year to provide enough time to respond to a number of complex issues that arose out of AEMO’s submission to the draft determination. 

In making its final determination, the Commission consulted with interested stakeholders to address both the design of the general power system risk review and some issues relating to additional network service provider obligations. 

The Commission’s final decision incorporates feedback from a workshop held on April 27, 2021 to address these matters as well as further informal consultation.

There were several small changes resulting from the additional consultation activity. These changes balanced AEMO’s information requirements for the GPSRR with a potential increase in effort over the previous PSFRR. The final outcome also better connects the GPSRR into existing planning processes.

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