AEMC consultation paper released as part of its Transmission Planning and Investment Review

What you need to know

The AEMC commenced its Transmission Planning and Investment Review on 19 August 2021. The purpose of the review is to identify issues within the existing regulatory frameworks in relation to the timely and efficient delivery of major transmission projects and to explore and recommend possible changes to the National Electricity Rules (NER) and other regulatory instruments.

The review will involve a consideration of how to best promote the efficient and timely delivery of major transmission projects in the following key areas:

1. transmission network planning and pre-delivery frameworks; and 
2. transmission investment framework.

The AEMC has released a consultation paper identifying key issues within the existing transmission planning framework and the framework for transmission investment and delivery.  These include:

• whether the existing ex-ante incentive-based framework is 'fit for purpose' to support the timely and efficient delivery of major transmission projects; and
• whether a TNSP's existing exclusive right to build and own transmission projects, but no corresponding obligation to invest and deliver these projects, leads to uncertainty regarding major projects proceeding (including potential financeability challenges and whether the delivery of major transmission projects should be made contestable).

A copy of the consultation paper can be found here.

Proposed rule change

The consultation paper also outlines issues for consultation in regard to the Material change in network infrastructure project costs rule change which will run concurrently with the review.

The rule change request proposes that, unless otherwise determined by the Australian Energy Regulator, project proponents be required to reapply the regulatory investment test (RIT) if, following completion of the RIT, a project's total assessed project cost was found to have increased by 15% or more (for transmission projects that cost less than $500 million or distribution projects that cost less than $200 million) or 10% or more (for transmission projects that cost more than $500 million or distribution projects that cost more than $200 million). 

The AEMC identified the following key issues arising from the proposed rule change:

• Who should decide whether the RIT must be reapplied?
• What projects should be covered by the new requirements?
• What percentage cost increase would trigger the reapplication requirement?
• Should the requirements to reapply the RIT be more targeted?
• How should the requirement to reapply the RIT be given effect?
• Should RIT cost estimates be more rigorous?

A copy of the consultation paper can be found here.

What you need to do

Stakeholders need to make submissions by completing the stakeholder submissions template which must be on letterhead (if submitted on behalf of an organisation), signed and dated. Submissions need to be submitted via the AEMC's website (project reference code EPR0087 for the Transmission Planning and Investment Review; project code ERC0325 for the rule change proposal).

The AEMC is encouraging stakeholders to use the template to provide feedback on the issues raised in the consultation paper and to provide any additional issues or suggest any additional solutions.

Submissions are due at 5 pm on 30 September 2021.

Authors:  Paul Newman, Partner; Andre Dauwalder, Senior Associate; Harriet Curran, Graduate.