We have initiated a review of the cost thresholds associated with the Regulatory Investment Test for Transmission (RIT-T) and Regulatory Investment Test for Distribution (RIT-D). The RIT-T and RIT-D are cost-benefit tests that network businesses must apply to identify the most efficient option to address a need on its network. The test applies for only transmission and distribution investments above certain cost thresholds set out in the National Electricity Rules.
The National Electricity Rules require the AER to undertake a cost thresholds review to ascertain whether in light of changes to input costs, the thresholds need to be changed to maintain their appropriateness.
The thresholds subject to review are set out in clause 5.15.3(b) and (d) of the National Electricity Rules.
The cost thresholds for transmission investments were last reviewed in 2012, where the cost threshold for a partial RIT-T exemption set out in clause 5.16.4(z1)(1) of the National Electricity Rules was increased to 38 million. This review will be the first review of the cost thresholds for distribution investments.
The review is being conducted in accordance with clause 5.15.3 of the National Electricity Rules. In accordance with those requirements, we will publish a draft determination shortly setting out:
- whether the cost thresholds need to be amended to reflect increases or decreases in the input costs to ensure that the appropriateness of the cost thresholds is maintained over time
- our reasons for determining whether the cost thresholds need to be varied to reflect increases or decreases in the input costs
- if there is to be a variation in a cost threshold, the amount of the new cost threshold and the date the new cost threshold will take effect
- our reasons for determining the amount of the new cost threshold
Stakeholders will be invited to provide written submissions on the draft determination. A final determination will be published once we have considered all written submissions received.