The Australian Energy Regulator (AER) has released its proposed financeability guideline for consultation. This is a new requirement for the AER following a final rule change from the Australian Energy Market Commission (AEMC).
The Guideline sets out how we will test for the financeability of transmission projects that form a key part of the transition to net zero by 2050. The proposed guideline applies to transmission network service providers (TNSPs) that are undertaking large infrastructure projects set out in the optimal development path from the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP).
The financeability guideline provides detail on how we will assess a TNSP’s request for an adjustment to cashflows, including the financial metrics to be used in our assessment.
We invite stakeholders to assist the AER in making our final financeability guideline by lodging submissions on the proposed guideline by 28 August 2024. Submissions, and general inquiries, can be sent electronically to ModelReviews
aer [dot] gov [dot] au (ModelReviews[at]aer[dot]gov[dot]au).
Background
On 21 March 2024 the AEMC released its final determination on Accommodating financeability in the regulatory framework rule change. This rule change allows TNSPs to request an adjustment to the depreciation profile of assets that form part of an actionable ISP project by bringing forward cashflows if the project were to face financeability issues.
The final rule required the AER to develop and publish a financeability guideline that provides further detail on how we would assess a TNSP’s financeability request. This includes the financial metrics and weightings for those metrics used to calculate the TNSP’s financeability position, and how this relates to the financeability threshold used for the financeability test.