The Australian Energy Regulator (AER) has published final amendments to the Cost Benefit Analysis (CBA) and Regulatory Investment Test (RIT) application guidelines, which include:
- updates to existing Cost Benefit Analysis guidelines
- updates to existing RIT‒T application guidelines
- updates to existing RIT‒D application guidelines
To clarify aspects of the CBA and RIT process and enhance transparency, the final guideline amendments include further guidance on:
- the approach to identifying a material change in circumstances that may trigger the requirement for a RIT proponent to reconsider the conclusions in the RIT
- acceptable cost estimate accuracy classification systems that should be used for the RIT and improved transparency regarding the derivation of cost estimates for credible options identified in the RIT.
- the definition of ‘early works’ activities conducted by a RIT proponent.
This guideline review covers amendments resulting from the Australian Energy Market Commission’s (AEMC’s) material change in network infrastructure project costs rule determination, and the Transmission Planning and Investment (TPI) Review Stage 2 final report.
As determined in the AEMC’s rule change, the commencement date for the final amendments is 9 October 2023.
The new requirements do not apply to projects for which a Project Assessment Draft Report (PADR) or Draft Project Assessment Report (DPAR) had already been published by this date.
Future guideline updates
The AER is aware that there are several upcoming changes to the National Electricity Rules (NER) that will require an update to these guidelines.
Although these changes have not been covered in this guideline update, we intend to update the guidelines to capture these issues in 2024 to ensure the guidelines remain fit for purpose.
This includes amendments to capture:
- The AEMC’s current implementation of a rule change to enhance TNSP engagement with communities
- a value of emissions reduction which was indicated in the AER’s guidance on the amended National Energy Objectives (NEOs)
- further applicable amendments arising from the AEMC's transmission planning and investment review
Background
On 18 May 2023, the AER published a consultation paper on the review of the CBA guidelines and RIT application guidelines to engage stakeholders on key issues ahead of any guideline amendments.
On 28 July 2023, the AER published draft amendments to the CBA guidelines and RIT application guidelines, which sought stakeholder submissions on these draft amendments.
The RITs are cost–benefit analyses that network businesses must perform and consult on before making major investments in their networks. When undertaking RITs, network businesses must give due consideration to what options are out there, before identifying the best way to address needs on their networks.