Guidelines to make the integrated system plan actionable

The Australian Energy Regulator (AER) has developed guidelines to make the integrated system plan (ISP) actionable. These include:

• a new cost benefit analysis guideline
• a new forecasting best practice guideline
• updates to existing regulatory investment test for transmission (RIT–T) instrument and application guidelines.

These guidelines are part of a broader reform led by the Energy Security Board (ESB), which has resulted in changes to the National Electricity Rules to convert the ISP into action. The new rules streamline the transmission planning process while retaining rigorous cost benefit analysis. While the new rules are effective from 1 July 2020, the new guidelines will come into effect through the 2022 ISP.

Under the new rules, the ISP provides a coordinated whole-of-system plan for the efficient development of the power system that meets power system needs in the long term interests of consumers. The ISP ‘actions’ key projects by triggering RIT–T applications. The RIT–T is a cost benefit analysis that transmission businesses must perform and consult on before making major investments in their networks.

Under the new rules, the ISP is subject to additional governance arrangements through binding cost benefit analysis guidelines and forecasting best practice guidelines. The RIT–T instrument and associated application guidelines have also been updated to be consistent with the new planning process. In line with the new rules, the guidelines seek to provide AEMO, in developing the ISP, with flexibility in how it identifies the optimal pathway for the National Electricity Market. However the guidelines also provide AEMO with requirements to:

• engage closely with stakeholders
• be transparent and explain how it applies its judgement
• undertake a robust market-wide cost benefit analysis.

We developed these guidelines in line with the consultation process set out in the National Electricity Rules. We commenced the consultation process on 20 November 2019 with the publication of an issues paper, and held a joint public forum with the ESB on 5 December 2019. On 15 May 2020, we published the draft guidelines to make the ISP actionable, which was followed by a stakeholder webinar on 4 June 2020.