On 19 August 2021, the Australian Energy Market Commission (AEMC) published a consultation paper to commence the Transmission Planning and Investment Review (Review).
The AEMC self-initiated the Review to identify issues with, and explore reforms to, the existing frameworks for planning, investing in and delivering major transmission projects. The aim of the Review is to ensure these frameworks are fit-for-purpose to support the timely and efficient delivery of discrete investments of the size and scale required for Australia’s energy transition to net zero, in the long-term interests of consumers.
The AEMC is delivering the Review in the following stages:
- Stage 2: This stage focuses on solutions that can be implemented in the near-term.
- Stage 3: This stage focuses on issues that are of considerable complexity and/or are longer-term reforms.
- Contestability workstream: This workstream focuses on examining whether contestability in the provision of transmission services could be a proportionate approach to the existing regulation of transmission projects.
Stage 1 of the Review identified, with the input of stakeholders, the priority issues with the transmission planning and investment framework to be explored under the subsequent stages of the Review.
The AER contributes its expertise to the Review primarily through its representation on the Review's Market Bodies Advisory Group, which meets regularly. The AER's written submissions to the Review are contained below. Through the AER’s engagement in the Review, we are progressing our thinking on medium to long term reforms that we identified as part of our Transmission Investment Regulation (TIR) review to improve the assessment and delivery outcomes of actionable Integrated System Plan projects. This includes the AER's early thinking on contestability.
Consultation paper
The AEMC sought stakeholder feedback on the identification and prioritisation of issues to be explored under the Review and canvassed initial issues in the consultation paper to facilitate stakeholder consultation. The consultation paper also seeks stakeholder feedback on the Material change in network infrastructure project costs rule change, which will run concurrently with the Review.
The AER provided its submission to the consultation paper on 30 September 2021.
Contestability - Options paper
On 7 July 2022, the AEMC published an options paper for the contestability workstream of the Review. The options paper sought feedback from stakeholders to inform the AEMC’s assessment of the costs and benefits associated with increasing contestability in the provision of major transmission projects in the NEM. Specifically, the AEMC sought feedback on a spectrum of four contestability strawpeople options, as well as on their proposed assessment framework for this workstream.
The AER provided its submission to the contestability options paper on 16 August 2022.
Stage 3 - Draft report
On 21 September 2022, the AEMC published its draft report for Stage 3 of the Review. The draft report considers:
- a spectrum of alternative options to the existing current economic assessment process to identify if changes would support the timely delivery of strategically important projects
- how transmission planning considers the role of transmission in the transition to net zero
- additional guidance to clarify how any benefits from concessional finance are treated in the regulatory framework
- a new incentive mechanism may be a suitable response to manage delivery risk associated with TNSPs’ exclusive right with no obligation to invest
- opportunities to support TNSPs in managing increased cost risk and/or uncertainty associated with major projects.
The AER provided a submission to the draft report on 1 November 2022.
AER submission - Transmission Planning and Investment Review - Stage 3 draft report - November 2022