On 5 September 2023, the AER provided a letter to Energy Networks Australia for circulation to its relevant electricity transmission and distribution members, which advised of the AER’s views on the compliance concerns expressed by networks arising from AEMO's revised methodology for the calculation of System Strength Quantity (SSQ) under the National Electricity Rules (NER).
In particular, the letter noted the AER’s view that, should a System Strength Service Provider (SSSP) adopt AEMO’s revised methodology for calculating SSQ when calculating system strength charges, we do not intend to take any action in relation to the resultant non-compliance with clause 6A.23.5(j) of the NER. The AER’s position is subject to a rule change request to allow the revised SSQ methodology under the NER being lodged with, and progressed by, the AEMC as a priority. The letter notes that, once the AEMC has issued its final rule change determination, the AER will re-assess its position on what is a compliant approach under the NER for new connections looking forward.
The AER has published this letter for stakeholder transparency, given the interest that connecting parties have in the calculation of system strength remediation costs by SSSPs.
It is important to note that the AER provided this letter of comfort by exception. The AER issued this letter to enable pragmatic implementation of the system strength framework pending AEMC consideration, in light of broad stakeholder agreement that the revised SSQ methodology is expected to benefit consumers. The AER’s position is the result of extensive engagement between the AER, AEMO, the AEMC and networks, with a view to promoting a better outcome for consumers.