On 23 September 2009, the AEMC provided its final report to the Ministerial Council on Energy (MCE) on the review into the current electricity distribution network planning and expansion arrangements in the National Electricity Market.  The AEMC has now published this final report on its website.

The final report provides the AEMC's recommendations and supporting reasoning for the establishment of the national framework consistent with the direction provided by the MCE.  A draft rule change request has also been prepared to implement the new arrangements for the MCE's consideration.

The proposed design of the national framework would result in a clearly defined and efficient planning process for distribution network investment and support the efficient development of distribution networks.  Appropriate transparency and information regarding distribution network service providers' (DNSPs) planning and investment activities would be provided to allow market participants to make efficient investment decisions and to enable non-network providers to raise credible alternatives.

The planning arrangements for the national framework consist of the annual reporting process, the Demand Side Engagement Strategy and the Regulatory Investment Test for Distribution (RIT-D) process.  It is through the interaction of these three components that the intended purpose and objectives of the national framework is best achieved.  The effective utilisation of the proposed planning framework should minimise costs in the long run by providing a clear process to ensure all feasible solutions are considered effectively at the appropriate time.  This would allow the most effective solution to a problem to be identified.

In the final report, the AEMC also recommended that a separate review be initiated by the MCE into the security and reliability standards relating to the design and planning of distribution networks, and supporting draft terms of reference for the MCE's consideration.

Timetable for the review

Under the MCE’s terms of reference for the review, the AEMC was required to submit its final report on the review to the MCE by 30 September 2009. The AEMC's timetable for the review was as follows:

Background

On 17 December 2008, the MCE directed the AEMC to conduct a review into the current electricity distribution network planning and expansion arrangements in the National Electricity Market, and to propose recommendations to assist the establishment of a national framework for distribution network planning. A copy of the notice of the MCE’s direction and the MCE’s terms of reference for this review can be found below.

The MCE requested the AEMC undertake this review after considering a report by NERA Economic Consulting (NERA) and Allen Consulting Group (ACG) titled ‘Network Planning and Connection Arrangements – National Frameworks for Distribution Networks’. This report was commissioned by the MCE Standing Committee of Officials (SCO) in 2007 to provide advice on a national framework for electricity distribution planning, connection and connection charge arrangements. NERA/ACG’s report and MCE SCO’s policy response to this report can be found on the MCE’s website. It should be noted that the AEMC’s Review will not cover distribution network connections or other network access issues, as these issues are to be addressed by the MCE via a separate process.

On 12 March 2009, the AEMC published its Scoping and Issues Paper on the Review. This Scoping and Issues Paper commenced the AEMC's Review. The purpose of this Paper was to seek stakeholder comments on the scope and key design issues that require resolution in recommending a national framework for distribution planning and expansion to the MCE. Submissions to the Scoping and Issues Paper closed on 17 April 2009.

The AEMC held two stakeholder workshops on a possible design of the national framework in May and June. The objective of these workshops was to obtain stakeholder comments on the appropriate design for the national framework and to discuss a number of policy and technical issues. A high level model for the national framework was outlined in the Workshop Paper and presented at the workshops.  The workshops were well attended and invaluable to the process of developing the recommendations for the Draft Report.

On 7 July 2009, the AEMC published its Draft Report for the Review.  The draft recommendations for the national framework had been developed to achieve the MCE objectives and take into consideration stakeholder comments received on the Scoping and Issues Paper and provided at the stakeholder workshops.  Submissions on the Draft Report closed on Thursday 13 August 2009.

On 5 August 2009, the AEMC held a public forum in Melbourne.  The AEMC presented its draft recommendations and stakeholders had the opportunity to ask questions of the AEMC and discuss any issues of concern. The AEMC's presentations at the public forum and a transcript of the proceedings have been published.

Reference Material for the Review

On 22 May 2009, the AEMC released a consultancy report as reference material for the Review. The report was prepared by Sinclair Knight Merz (SKM) and is titled, "Advice on Development of a National Framework for Electricity Distribution Network Planning and Expansion". The report provided a summary of the processes currently undertaken by electricity Distribution Network Service Providers in the National Electricity Market, when planning and augmenting their networks