Rule Changes: Completed

Application of rate of return guidelines to TasNetworks

Reference:
ERC0223
Proponents:
TasNetworks
Decision:
Rule made
Amending rule:
12
Commenced:
03-Oct-2017
Amending chapters:
11
Rule version:
99
Other rule versions:

Overview

On 26 September 2017, the Australian Energy Market Commission (AEMC) made a rule change regarding the timing of the application of the Australian Energy Regulator’s (AER) Rate of Return Guidelines’ revision, scheduled to commence by 17 December 2018, to TasNetworks’ distribution business.

On 26 September 2017, the Australian Energy Market Commission (AEMC) made a rule change regarding the timing of the application of the Australian Energy Regulator’s (AER) Rate of Return Guidelines’ revision, scheduled to commence by 17 December 2018, to TasNetworks’ distribution business.

The Commission considered the rule would reduce regulatory and administrative burden.

Having the same Rate of Return Guidelines apply to TasNetworks' five year aligned distribution and transmission regulatory control period commencing 1 July 2019 would realise greater efficiencies for TasNetworks’ revenue proposal submissions, such as the ability to consult stakeholders jointly. It was expected to also have additional benefits in reducing regulatory and administrative burden for the AER in assessing TasNetworks' revenue proposals against one Rate of Return Guidelines rather than two.

TasNetworks would also not have to consider the revised 2018 Rate of Return Guidelines in making its revised regulatory proposal submission for its five year distribution regulatory control period commencing 1 July 2019 within a short time frame. This would provide TasNetworks regulatory certainty in preparing its revised regulatory proposal submission.

For these reasons, the Commission considered the final rule would, or was likely to, meet the national electricity objective. The Commission determined to make the rule as proposed by TasNetworks, with minor amendments. The final rule commenced on 3 October 2017.

Background

On 9 June 2017, Tasmanian Networks Pty Ltd (TasNetworks) submitted a request to the AEMC to make a rule change regarding the timing of the application of the Australian Energy Regulator’s Rate of Return Guidelines’ revision, scheduled to commence by 17 December 2018, to its distribution business.

The rule change request related to implementation of the Rate of Return Guidelines Review rule change which inserted rule 11.93 into the National Electricity Rules (NER).

TasNetworks stated that without the proposed amendment, clause 11.93 of the NER would result in different Rate of Return Guidelines applying to its five year transmission and distribution regulatory control periods commencing 1 July 2019.

TasNetworks stated that applying different Rate of Return Guidelines to each of its transmission and distribution determinations would cause inconvenience and timing issues, and create further complications for its stakeholders.

TasNetworks’ proposed solution was to have the current 2013 Rate of Return Guidelines apply to its five year distribution determination for the regulatory control period commencing 1 July 2019.

Consultation

On 22 August 2017, the AEMC published a consultation paper. Submissions to the consultation paper were due 19 September 2017. No submissions were received.

The rule change process

TasNetworks proposed its rule change request be treated as non-controversial and expedited under section 96 of the National Electricity Law. The Commission accepted the rule change request was for a non-controversial rule and commenced an expedited rule change process, subject to any written requests not to do so. The closing date for receipt of written requests was 5 September 2017. No requests to expedition of this rule change process were received.

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