Chairman of the Australian Energy Market Commission, Dr John Tamblyn, today released new Rules for the regulation of transmission system revenue. The release represents a significant milestone for the National Electricity Market, as it concludes the review of the Rules applying to the regulation of transmission network service providers as part of the ongoing energy market reforms directed by the Ministerial Council on Energy.
Australia's transmission network operators own assets worth $9 billion and invest more than $0.5 billion annually on the infrastructure that delivers power from generators to electricity consumers across the country.
The high voltage transmission grid connects and covers Queensland, New South Wales, Australian Capital Territory, Victoria, South Australia, and Tasmania in the National Electricity Market.
The transmission network also plays a key role in promoting competition and efficient resource use in Australia's wholesale and retail electricity markets.
The transmission regulation regime is a critical facilitator of investment in the network and of efficient and reliable service delivery by network operators.
"The Commission's Review has been guided by the NEM objective of promoting an efficient, reliable and safe electricity system. Its goal has been to design a regulatory regime that will facilitate efficient investment in and operation of transmission services thereby promoting competition and efficiency in wholesale and retail electricity markets."
In addition to serving the long-term interests of electricity users, the Commission has sought to improve the environment for investment by increasing regulatory clarity and certainty through the Rules.
The development of the Rules has been guided by key themes that emerged during consultation with stakeholders and has addressed the following priorities:
- Aligning the investment and operation decisions of transmission operators with the needs of network users and electricity consumers through incentives for:
- Improved cost efficiency and reliability at times of most value to the market;
- Timely and efficiently located network augmentation investment
- Contestable service delivery and adoption of efficient non-network solutions; and
- Commercial negotiation of prices and service quality where feasible.
- Improving clarity, certainty and transparency of the regulatory process in framing the Revenue Rule through targeted measures including:
- Codifying procedures for TNSPs to submit a Revenue Proposal to the Australian Energy Regulatory (AER) for consideration and determination and specifying fixed timetables for regulatory decision-making;
- Providing clear guidance to be applied by the AER when exercising decision-making discretions; and
- Specifying matters on which the AER must consult and areas in which its current guidelines are to be augmented.
Dr Tamblyn said today that the Commission had sought to strike a balance between codification of regulatory approach and provision of guided discretion to the AER in implementing the regulatory framework.
"This Rule determination follows extensive consultation and Commission analysis regarding the appropriate Rules for achieving this balance. In releasing the Rules and the associated Determination the Commission has fulfilled its statutory obligation to ensure that the new Rules will commence on 1 January 2007." Dr Tamblyn said.
In formal terms, the AEMC is today issuing a Notice in accordance with sections 102 and 103 under the National Electricity Law advising of the making for a Rule and release of its associated Determination. The Rule is titled National Electricity Amendment (Economic Regulation of Transmission Services) Rule 2006.
For information contact
AEMC Chairman John Tamblyn (02) 8296 7800
AEMC CEO, Steven Graham (02) 8296 7800 or 0412 042 634