Submission to the AER’s Draft system security network support payment guideline

The JEC made a submission to the Australian Energy Regulator’s draft guideline on system security network support payments. 

System security network support services are a growing area of need as the energy system moves from a fossil fuel basis to a renewable one, as these services were previously provided predominantly by the fossil-fuel generators. 

We argued that the proposed regulatory system for these investments offered inadequate alignment between the interests of consumers and the transmission network service providers (TNSPs) who invest in these services on their behalf. There is also inadequate information available to the regulator to meaningfully oversee the investments and ensure they are optimal from the consumer’s perspective. 

To ameliorate these shortcomings, we propose that defining the level of need for system security services is defined not by the TNSP but by the Australian Energy Market Operator (as was previously the practice) and that TNSPs are required to identify and evaluate alternative ways of fulfilling a system security service need, just as they do in the investment tests for transmission.