The AER has today published an application, received from APA Group in relation to Basslink, for review of a system security network support (SSNS) contract. The draft contract is for Basslink to procure the load shedding and generation tripping services from Hydro Tasmania required under the existing Frequency Control System Protection Scheme (FCSPS). Basslink is required to have these FCSPS services in place by 1 July 2026 to enable the Basslink interconnector to continue to operate at its full transfer capability.
Under the AEMC’s Improving Security Frameworks for the Energy Transition rule change, transmission network service providers (TNSPs) can seek AER review of SSNS payments, or payment methodologies, set out in a draft contract between the TNSP and SSNS provider (such as a generator, battery, or large electricity users).
The AER’s role is to determine whether the expenditure for proposed SSNS payments and payment methodologies will likely be prudent and efficient. We will assess the application for consistency against the operating expenditure objectives and criteria in the National Electricity Rules, in accordance with our SSNS payment guideline.
Due to confidentiality requirements, some elements of the application are redacted to protect confidential and commercial-in-confidence information related to specific terms of the draft contract, and ongoing contract negotiations. We consider it important that stakeholders have an opportunity to provide feedback on the prudency and efficiency of the proposed payments and payment methodologies. We are seeking stakeholder views in particular on:
- the process Basslink has followed to achieve the lowest possible cost outcome in the circumstances, and
- the proposed contract payment structure.
We invite interested parties to make submissions on the application by close of business 4 June 2026. Submissions, or requests for alternative methods of feedback, should be sent to systemsecuritycontractreview
aer [dot] gov [dot] au (systemsecuritycontractreview[at]aer[dot]gov[dot]au).
We expect to make a determination on the application by 26 June 2026 in line with requirements under the National Electricity Rules.
Background
The Improving Security Frameworks for the Energy Transition rule change (the ISF Rule), published on 28 May 2024, changed the way TNSPs recover the costs of SSNS payments made for system security services. System security services include system strength, inertia, and network support and control ancillary services (NSCAS) typically provided by a synchronous generator, battery or larger energy users, to ensure the power system is secure as it transitions to accommodate more renewable generation.
The ISF Rule introduced a revised method for forecasting and recovering TNSP expenditures for SSNS services through a new annual transmission pricing process, and revisions to the existing ex-post network support payment (NSP) pass through process. In addition, the ISF Rule allows (but does not require) TNSPs to seek a determination from the AER that an expenditure for a proposed SSNS payment, or a methodology for such a payment as set out in a draft contract between the TNSP and SSNS provider (e.g. a generator or battery), will likely be prudent and efficient, i.e. consistent with the operating expenditure objectives, criteria and factors, and relevant NSP pass through factors.
To make this determination, we undertake an assessment of the application against the NER criteria. The NER criteria and our general approach to reviewing draft system security contracts is outlined in the AER’s SSNS payment guideline.