The Australian Energy Regulator (AER) has released our final guideline that sets out how we will make revenue determinations for network operators competitively selected to carry out network projects under the NSW Electricity Infrastructure Roadmap.
We’ve been appointed to undertake this role under the NSW Electricity Infrastructure Investment Act 2020 (EII Act). Our guideline sets out how we intend to determine that the amounts to be paid to network operators for constructing and maintaining these projects are efficient, as these amounts will ultimately be recovered from NSW electricity consumers through their retail bills.
The contestable approach, allowed under the EII Act, permits a different revenue determination process to the one we use under the National Electricity Rules. It focuses on us assessing whether the competitive assessment process is genuine and appropriate. If we are satisfied with the process, we may adopt the outcome of the process in our determination rather than undertaking a detailed review of components of a revenue proposal.
Our draft guideline was based on policy positions developed by the NSW Office of Energy and Climate Change. Regulations underpinning the contestable approach have since been developed and our final guideline reflects those regulations. The final guideline is accompanied by an explanatory statement which sets out key changes from the draft guideline and responds to issues raised in submissions on the draft guideline.
The AER is also developing a guideline for our approach to non-contestable network infrastructure projects under the EII Act, which is intended to substantially reflect the approach to economic regulation for transmission businesses under the National Electricity Rules. We will release that guideline for consultation later in 2022.
Background
The AER exists to ensure energy consumers are better off, now and in the future. We are the economic regulator for electricity and gas networks in every state and territory in Australia except Western Australia. We regulate electricity networks under the National Electricity Law and National Electricity Rules. We also regulate natural gas pipelines under the National Gas Law and the National Gas Rules.
On 12 November 2021 we were appointed as a Regulator under the NSW Electricity Infrastructure Investment Act 2020.