AEMC launches two related reviews into the framework for Transmission Development

This project is named ‘Material change in network infrastructure project costs – ERC0325’.

This project is named ‘Transmission Planning and Investment Review – EPR0087’.

On 15 February 2021, the AEMC received this rule change request from a combination of both:

1)  Large Energy User representatives (the EUAA and the MEU); plus

2)  Wholesale Generators/Retailers (Delta Electricity, ERM Power (now Shell), and AGL Energy)

It’s not often we see those two groups of stakeholders combine in any submission!

The request proposes that, unless an exemption is granted by the AER, a proponent must reapply the regulatory investment test (RIT) if, following completion of the RIT, the estimated cost of a transmission or distribution project materially increases.

The proponents note that:

“Currently the RIT proponent has the sole discretion to determine if the RIT should be reapplied following any material change in circumstance. This applies even where a large increase in project costs occurs following the issue of the Project Assessment Conclusion Report (PACR) for a transmission network project or the Final Project Assessment Report (FPAR) for a distribution network project and AER RIT approval.”

They note:

“Consumer and stakeholder confidence in the ability of the RIT to ensure a transparent and efficient network investment framework has been negatively impacted due to significant increases in network project costs sought by network project proponents when requesting capital funding approval from the AER following completion of the RIT process.”

With the significant amount of transmission development necessary to move to a high-penetration renewables grid, the various challenges of transmission development (including how to optimise costs – which is the focus of the concerns raised here) is clearly going to be a major issue moving forwards.

The AEMC has self-initiated the Review to:

(a) identify issues with the existing regulatory frameworks in relation to the timely and efficient delivery of major transmission projects

(b) explore options for reform or improvements to the existing regulatory frameworks

(c) recommend possible changes to the National Electricity Rules (NER) and other regulatory instruments (if required) to support frameworks that are fit-for-purpose and promote the timely and efficient delivery of transmission services.

The AEMC proposes that a two-stage process will be used:

“Stage 1: identify and test issues associated with the frameworks for planning, funding and delivering major transmission projects.

Stage 2: identify and develop solutions to address the issues identified in Stage 1.”

As part of this project initiative, the AEMC has published this 91-page Consultation Paper:

Some key dates on this one that I can see:

15 February 2021 = the AEMC received this rule change request

Thursday 19th August = Project initiated (hence this article two days afterwards)

Thursday 2nd September (11:00-12:00) = AEMC holding a Public Forum:

This is a joint forum, addressing both initiatives.

You can register for this here

Thursday 30th September = Submissions Close (day before Five Minute Settlement starts!)

Thursday 9th December = Draft Determination due.

———-

Thursday 3rd March 2022 = Final Determination envisaged.

Some key dates on this one that I can see:

Thursday 19th August = Project initiated (hence this article two days afterwards)

Thursday 2nd September (11:00-12:00) = AEMC holding a Public Forum:

This is a joint forum, addressing both initiatives.

You can register for this here

Thursday 30th September = Submissions Close (day before Five Minute Settlement starts!)

Thursday 16th December = Draft Report due.