The National Electricity Rules require the AER to undertake a review every three years of the cost thresholds associated with the regulatory investment test for transmission (RIT-T) and the regulatory investment test for distribution (RIT-D) to ascertain whether these cost thresholds need to be changed to reflect changes in input costs to maintain their appropriateness.
On 31 July 2015 the AER commenced the 2015 cost thresholds review.
On 2 September the AER published a draft determination for the 2015 cost thresholds review. The AER's draft determination was that:
- for the RIT-T cost thresholds, the $5 million cost thresholds referred to in clauses 5.15.3(b)(1),(2),(3)(4) and (6) of the National Electricity Rules should be increased to $6 million and the $35 million cost threshold referred to in clause 5.15.3(b)(5) of the NER, which was inceased to $38 million in the 2012 cost thresholds review be increased to $41 million
- for the RIT-D cost thresholds, the $20 million cost threshold referred to in clause 5.15.3(d)(4) be increased to $21 million and the other RIT-D cost thresholds listed in clause 5.15.3(d) of the National Electricity Rules remain unchanged.
The AER sought submissions on the draft determination. Three submissions were received.
Following consideration of the submissions received, the AER has now published a final determination for the 2015 cost thresholds review upholding the draft determination. This concludes the 2015 cost thresholds review. This cost threshold thresholds review has been conducted in accordance with clause 5.15.3 of the National Electricity Rules.
The RIT-T and RIT-D are cost-benefit tests that network businesses must apply before building electricity network infrastructure. Network businesses are required to apply the relevant test in instances where the capital costs of proposed transmission investments are above certain cost thresholds.