Note that this page only refers to cost recovery for FCAS Regulation costs, and that FCAS Contingency cost recovery is described here.
The method of cost recovery has changed over time, as noted below:
(A) Prior to when 2001
Prior to 2001, there was no FCAS market, and so the provisions below do not apply.
(B) when 2001 to 7th June 2025 using ‘Causer Pays’
AEMO uses Regulation FCAS, to make relatively small adjustments to the supply and demand balance in the electricity system.
Under the current ‘Causer Pays’ framework, wholesale Market Participants (in their FCAS Portfolios) are assessed based on the relative unhelpfulness of their impact on the power system frequency.
Under this ‘Causer Pays’ method;
1) AEMO recovers Regulation FCAS costs from those DUIDs who have an overall negative impact on the power system,
2) while those who have a positive impact don’t gain any revenue (though they avoid paying costs).
Some articles tagged with ‘Causer Pays’ are here.
… but we’d like to particularly highlight this March 2017 article ‘NEM FCAS causer pays factor issues for wind and solar farms’ as an introduction.
This Causer Pays method utilised the AEMO’s 4-second SCADA data, which has been utilised in the analysis behind a number of articles on WattClarity (some of which we have remembered to tag here).
(C) 8th June 2025 onwards
From Sunday 8th June 2025, the method of apportioning FCAS Regulation costs changes, to the new ‘Frequency Performance Payments’ method.
More information about this process:
1) Is being collated here on WattClarity;
2) Can be found on the AEMC website at:
(a) the Rule Change page for the ‘Primary frequency response incentive arrangements’; and
(b) the Media Release ‘Final Rule for new Incentives to Maintain Power System Frequency’ on 8th September 2022; and
3) On the AEMO website:
(a) Under this Project Page for the ‘Frequency Performance Payments project’.