The Australian Energy Regulator (AER) today released its determination on a negative cost pass through application received from Powerlink. Powerlink proposed a negative pass through amount of $12.8 million relating to costs saved through the deferral of network augmentation projects in the Northern Bowen Basin area following the Queensland Government’s decision to amend the network reliability standard for that area.
As the economic regulator of transmission services in Queensland, the AER determines a maximum revenue allowance to enable Powerlink to recover its efficient costs in providing these services.
The AER supports initiatives, such as those by Powerlink and the Queensland Government, to reduce network costs through the consideration of efficient non-network alternatives and setting reliability standards which appropriately balance the costs and benefits of network reliability for consumers.
On this occasion, however, the AER has determined that Powerlink’s application, relating to the proposed net cost reductions, does not satisfy the definition of a service standard event under the National Electricity Rules. In particular, the amendment to the network reliability standard in the Northern Bowen Basin does not materially decrease the costs to Powerlink of providing prescribed transmission services.
As the AER has found that a service standard event has not occurred, the AER cannot determine a required pass through amount to be passed through to network users.