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Submissions

Extending the regulatory investment test for transmission

Author

Oliver Derum

This submission responds to the Australian Energy Market Commission’s (AEMC) consultation paper for a rule change submitted by the Australian Energy Regulator (AER). Currently, transmission networks are required to publish detailed information about investments in network expansion greater than $5 million, including the need to which the investment responds, and to allow external stakeholders to make alternative proposals such as demand-side or non-network solutions. This requirement is known as the Regulatory Investment Test for Transmission (RIT-T). The AER’s proposed rule change would see the same requirements extended to projects to replace existing assets above the same $5 million threshold.

Energy Consumers Australia supports the proposed rule change. The submission draws on forecasts from the Australian Energy Market Operator (AEMO) that predict that over the next 20 years, electricity transmission businesses will focus on replacement expenditure rather than expanding or augmenting their networks. Under such circumstances, and at a time of considerable uncertainty about the future shape of the transforming electricity sector and future demand, it is appropriate to extend the requirements of the RIT-T to replacement expenditure. Scrutiny of significant investments (and the in-depth examination of alternatives to like-for-like replacement) is an important part of ensuring that consumers pay no more than is necessary for electricity network services.

The full submission can be read here.