On 9 January 2025, the AER published AEMO's 2024 Cost Benefit Analysis Guidelines compliance report (2024 ISP compliance report) as per the option expressed in section 2.1.2 of our cost benefit analysis (CBA) guidelines and found no instances of non-compliance. On 23 December 2024, we sent AEMO a letter with this result.
Background
AEMO released its 2024 Integrated System Plan (ISP) on 26 June 2024. On 24 July 2024, AEMO submitted its compliance report for the 2024 Integrated System Plan (ISP). Under our CBA guidelines, AEMO is required to provide us with a compliance report no later than 20 business days after the publication of the final ISP.
The CBA guidelines present AEMO with binding requirements and considerations which it must address in its planning of the ISP. AEMO’s ISP compliance report addressed the 35 requirements and considerations in the most recent version of the CBA guidelines (October 2023) at the time of release for this compliance report.
The compliance report enables AEMO to self-identify whether it has:
- complied with applicable requirements
- had regard to applicable considerations (including the reasons for the weight it has attached to each consideration)
- resolved key issues raised by the AER through the issues register
- identified any breaches of the CBA guidelines, and provided explanation for any breach.
The compliance report explored AEMO’s assessment of compliance of its actions to the requirement and considerations of our CBA guidelines with respect to the 2024 ISP. This included actions and processes outlined with respect to:
- compliance reporting
- inputs, assumptions and scenarios
- CBA methodology such as setting development paths, counterfactuals and valuing costs and benefits
- treatment of externalities, option value and non-network options, and
- interactions and alignment with the RIT-T.
The compliance report did not identify any compliance issues or breaches of the CBA guidelines, and there were no further issues raised through the issues register.
We communicated our agreement with this position through the letter sent to AEMO below.