The AER has published a consultation paper on proposed amendments to the Capital Expenditure Incentive Guideline. This Guideline outlines our ex-ante and ex-post measures to incentivise efficient capital expenditure. The Capital Expenditure Sharing Scheme (CESS) provides ex-ante incentives for network service providers to undertake efficient capex during a regulatory control period. This is complemented by our ex-post review mechanism to ensure only efficient capex is rolled into the regulatory asset base. These measures mean that consumers pay only for efficient and prudent overspends and that consumers share in the benefits where a NSP is able to spend less than its capex forecast.
This consultation paper initiates our review of the Guideline to accommodate the Australian Energy Market Commission’s (AEMC) amending rule on managing ISP project uncertainty through targeted ex-post reviews published in August 2024. This requires us to update our Guideline to enable us to carry out separate targeted ex-post review for Integrated System Plan (ISP) projects and non-ISP projects.
In addition, this review considers additional matters that has been raised by stakeholders since our 2023 review of incentive schemes for regulated networks. Specifically, we are considering:
whether we should broaden the scope of exclusions in the CESS in certain circumstances; and
whether any adjustments to the CESS are needed to accommodate abandonment of large projects.
Invitation for submissions
Interested stakeholders are invited to send submissions in response to the questions and topics raised in this consultation paper by 21 March 2025. Submissions or enquiries about this consultation paper should be sent to aerinquiry
aer [dot] gov [dot] au (aerinquiry[at]aer[dot]gov[dot]au). Alternative contact methods are available and are described in the consultation paper.