AER deemed to have accepted ActewAGL’s vegetation clearance cost pass through application

The Australian Energy Regulator (AER) recently became aware that the transitional provisions of the National Electricity Rules (NER) have resulted in the AER being deemed to have accepted ActewAGL Distribution’s (ActewAGL) vegetation management cost pass through application, because the AER had not made a decision within 60 days of receiving ActewAGL’s application.

On 1 November 2013, ActewAGL submitted an application to the AER for a positive cost pass through arising from a material increase in vegetation management costs in 2012-13. Under the current Chapter 6 (cl. 6.6.1(k1)) the AER must make a cost pass through determination within 40 business days of receiving an application, but the AER can extend this period by a further 60 business if the determination involves issues of difficulty or complexity. In relation to ActewAGL’s cost pass through application, both the AER and ActewAGL acted on the assumption that the pass through deadlines in current Chapter 6 of the NER applied to ActewAGL’s application. Consequently, in this case, the AER extended the time for consideration of ActewAGL’s cost pass through application in order to obtain additional information and to consult with stakeholders.

Following ActewAGL seeking merits review by the Australian Competition Tribunal of the AER’s final decision, it was identified that the transitional Chapter 6 of the NER, not the current Chapter 6, applied to ActewAGL’s pass through application. Relevantly, transitional Chapter 6 of the NER does not contain the same provisions allowing the AER to extend the 60 business day period in which it is to make a cost pass through determination. The transitional Chapter 6 provides that if the AER has not made a decision within this period, it is deemed to have accepted the application.

As ActewAGL submitted its pass through application on 1 November 2013, the AER was required to make its determination by no later than 30 January 2014. As the AER did not do so, clause 6.6.1(e) of the transitional Chapter 6 operates to deem the acceptance of the pass through.

The pass through amount will be incorporated in prices from July 2015.