The AER has published proposed amendments to the cost benefit analysis (CBA) guidelines and application guidelines for regulatory investment tests (RIT-T & RIT-D) and instrument documents. 

The CBA and RIT guidelines provide guidance to proponents conducting a RIT, which is a cost-benefit test that network businesses must undertake before building electricity network infrastructure.  The Australian Energy Market Operator also uses the CBA guidelines in developing the Integrated System Plan (ISP) in its national planning function for the National Electricity Market (NEM).

The release of our amendments to the guidelines followed the conclusion of our first round of consulting on the major topics of our consultation paper. The feedback we received from the public forums we held and from written submissions influenced how the amendments were integrated into the guidelines. Further information can be found in the explanatory note accompanying the draft amendments.

Our amendments addressed:

• the implementation of changes in emissions and valuing emissions reduction as a market benefit in the CBA and RIT process;
• sharing concessional finance benefits with consumers;
• necessary amendments to action improving the workability of the feedback loop.
• addressing early works contingent project applications before the completion of the RIT process.
• changes to social licence and community engagement.
• other administrative changes and updates to the guidelines.

We hosted topic-specific information sessions providing an overview of the proposed amendments, including:

• how we have taken into account stakeholder submissions received in response to the consultation paper including feedback heard at the public forums in May and June 2024, and
• to assist stakeholders in developing their written submissions to draft amendments.

During August 2024, the AER held a series of virtual information sessions on the main topics of the draft amendments. The purpose of these sessions was to provide a summary of the main changes for each topic in the guidelines and seek stakeholder discussion and feedback on the content of the amendments.

Slide packs from all held forums and forum summaries are available to view below.

We also sent forum participants fact sheets with an overview of the review process and summaries of the amendments concerning the topics of a given forum, These fact sheets can be found below.

Below are the summaries for each of the stakeholder forums ran during this consultation process. The content of these summaries will be used to inform the final amendments.

On 5 September 2024, the AEMC released the final rule change determination for Bringing early works forward to improve transmission planning, and the final rule now applies to actionable ISP projects. 

Where the draft rule included a requirement for RIT proponents to include all early works costs in the RIT-T, the final rule requires incurred costs that are not recoverable to be treated as sunk. It also requires TNSPs to transparently document any early works costs in the RIT-T. Our draft amendments to the CBA Guidelines were based on the draft rule change determination released 23 May 2024. The final amendments to the CBA Guideline will therefore be different to the draft amendments to the extent necessary to implement the final rule.

The AEMC’s final determination also includes a transitional rule to allow any prior consultation to satisfy the rules requirements to update the CBA guidelines. We consider that submissions on our draft amendments will be relevant to the final amendments, but that stakeholders should have regard to the final rule change determination when making a submission to this CBA Guideline review.

The AER received 12 written submissions to the our positions and questions in the consultation paper. These are listed below.