The Australian Energy Regulator (AER) received written notification on 23 January from the Kangaroo Island Council and Commissioner for Kangaroo Island (the disputing parties) disputing conclusions made in the SA Power Networks’ final project report for the Kangaroo Island submarine cable regulatory cost-benefit assessment, known as RIT-D.
Under the National Electricity Rules, distribution businesses are required to undertake this cost-benefit assessment before making capital network investments in excess of $5 million. The purpose of the RIT-D is to identify the network or non-network investment option which maximises net economic benefits. This promotes efficient investment decisions and helps ensure that consumers pay no more than necessary for electricity network infrastructure.
On 12 April 2016, SA Power Networks commenced their RIT-D assessment and consultation process to identify the preferred investment option to maintain the security of supply to Kangaroo Island. The RIT-D consultation process concluded on 23 December 2016 with the publication of the final project assessment report identifying the installation of a new 33kV undersea cable between Kangaroo Island and the mainland as the preferred investment option.
Under the dispute resolution framework set out in the Electricity Rules, the AER has 40 days to make a determination on the dispute. The timeframe to make a determination can be extended up to 100 days.
The AER’s role in the dispute resolution process is to assess the distribution business’s compliance with the RIT-D and Electricity Rules rather than undertake a full merits review.
Where instances of non-compliance are identified, the AER may, as part of its determination, direct the network business to amend its final report to ensure the RIT-D is applied in accordance with the requirements of the Electricity Rules.
The AER is currently assessing the dispute grounds raised by the disputing parties and will make a decision within the timeframe set out in the Electricity Rules.
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