Today the Australian Energy Regulator (AER) published Compliance Bulletin No 5 ‘Criteria for determining credible options under the RIT-T’ (the compliance bulletin).
The regulatory investment test for transmission (RIT-T) replaces the regulatory test for consultations that commenced on or after 1 August 2010.The RIT-T is used by electricity transmission network service providers (TNSPs) to assess the efficiency of proposed investment options and identify the transmission investment option which maximises net economic benefits while meeting any relevant jurisdictional or Electricity Rules based reliability standards. As required under clause 5.6.5B of the Electricity Rules, the AER has developed and published the RIT-T and application guidelines which can be found at the AER's website.
The AER has identified an apparent misapplication by TNSPs of the criteria for developing alternative options in past undertakings of the regulatory test. While the RIT-T uses the term ‘credible options’ rather than ‘alternative options’ as used in the regulatory test, the AER is concerned that some TNSPs may also misapply the ‘credible option’ definition under the regulatory test. The RIT-T application guidelines provide guidance on what constitutes a credible option and the AER has published this compliance bulletin to draw attention to the importance of this requirement to assist TNSPs in undertaking future RIT-T consultations.
The AER encourages participants to examine their approach to determining credible options under the RIT-T to ensure that it reflects the requirements of the Electricity Rules.
A copy of the compliance bulletin is available on the AER website.
The AER’s Compliance and Enforcement Statement of Approach can be found at the AER's website.