In April 2023, the AER completed a review of all of the incentive schemes that it applies to network service providers. The review found that the service component of the service target performance incentive scheme STPIS remains fit for purpose, but that the market impact and network capability components are not working as intended.
The AER committed to commencing a review of market impact and network capability components of the STPIS at the end of 2023.
On 8 December 2023, the AER released an issues paper which is the first step in our review of aspects of the STPIS for transmission network service providers (TNSPs). The Issues Paper discusses components of the AER’s STPIS work, their effectiveness, and outlines possible options to address identified shortcomings. Submissions on the Issues Paper closed 5 April 2024.
On 6 November 2024, the AER published proposed amendments to the transmission STPIS for consultation. We invite energy consumers and other interested parties to make submissions on our proposed amendments by Monday, 3 February 2025.
On 22 November, the AER published a clarification relating to the Network Capability Component in the Explanatory Statement for proposed amendments to the electricity transmission STPIS.
Background
The STPIS provides financial rewards when TNSPs improve service standards, and financial penalties when service standards deteriorate. The scheme provides incentives to TNSPs:
- reduce the number and duration of outages (the service component of the STPIS)
- take planned outages when they have the least impact on wholesale market prices (the market impact component)
- undertake low cost projects which improve the capability of existing networks (the network capability component).
The transition to renewable energy sources is changing the way transmission networks operate and invest. The AER is assessing what aspects of the STPIS are no longer working as intended in light of these changes.
