The Australian Energy Regulator (AER) has extended the timeframe for making a decision on the dispute raised by Public Interest Advocacy Centre (PIAC) in relation to the following regulatory investment tests for transmission (RIT-T) undertaken by Transgrid:
- Maintaining Reliable Supply to the North West Slopes Area (‘NWS’); and
- Maintaining Reliable Supply to the Bathurst, Orange and Parkes Areas (‘BOP’)
Under the dispute resolution framework set out in the National Electricity Rules (NER), the AER has 40 calendar days to make a decision on the dispute. This can be extended by up to 60 days to account for the complexity of the issues involved. An automatic extension of time is also provided to account for the time taken for the RIT-T proponent or disputing party to provide information requested by the AER.
Following the extension, the AER is now due to make a decision no later than November 2022. However the AER is endeavouring to finalise the dispute resolution process as early as possible.
Background
On 1 August 2022, PIAC raised the dispute with the AER under clause 5.16B of the National Electricity Rules (NER) on the grounds that it believes that Transgrid may have incorrectly applied the RIT-T in both the NWS project assessment conclusions report (PACR) and the BOP PACR. In particular, PIAC outlines that:
- The scenarios used to assess the costs and market benefits for each credible option are not reasonable, or have not been reasonably weighted, because the assumptions and inputs relating to network capital costs, demand forecasts, values of customer reliability and discount rates are incorrect, implausible or outside of what can be assumed with reasonable confidence.
- The use of these incorrect or implausible assumptions, and the unreasonable weighting of the scenarios, may have materially influenced timing of investment, ranking of the credible options and basis for any investment.
The RIT-T is a cost‒benefit analysis that transmission businesses apply before making network investments in excess of $7 million. The purpose of the RIT-T is to identify the network or non-network investment option with the highest net economic benefits across the National Electricity Market. This promotes efficient investment decisions and helps ensure that consumers pay no more than necessary for electricity network infrastructure.
Our role in the dispute resolution process is to assess the transmission business’s compliance with the RIT-T and NER rather than to undertake a full merits review. Where instances of non-compliance are identified, the AER may, as part of its determination, direct the RIT-T proponent to amend its final report to ensure the RIT-T is applied in accordance with the requirements of the NER.