The Australian Energy Market Commission (AEMC) is investigating options to improve financing arrangements for the delivery of new transmission projects needed for the transformation of the energy system and a cleaner energy future.
In consultation papers released today, the AEMC explores two requested changes to the national electricity rules (NER) from Commonwealth Minister for Climate Change and Energy Chris Bowen.
The rule change requests focus on the timely and efficient delivery of projects and follow recommendations released through the AEMC’s recent Transmission Planning and Investment Review, proposing a number of changes to the NER.
A rule change on ‘concessional finance’ could see the benefits of financing for transmission projects sourced through government programs, such as the Commonwealth Government’s Rewiring the Nation Fund, passed back to consumers in the form of lower network charges, either now or in the future, easing hip pocket pressures.
A separate request regarding ‘financeability’ could see changes to the revenue-setting framework for transmission projects, allowing variation of the ‘depreciation profile’ of assets, supporting the business’ ability to raise finance but with no change to the revenue earned over the life of the asset.
Through the same request, the Commonwealth also seeks to clarify the treatment of depreciation for asset classes and to allow transmission businesses to recover depreciation for biodiversity offsets as these costs are incurred.
The proposed financeability changes would provide transmission businesses and investors with greater certainty to develop projects sooner, so that the system can keep up with the pace of transition and customers can enjoy reliable and secure power at the lowest possible price.
As traditional thermal generation sources such as coal and gas exit the system, transmission projects will be a critical enabler for the transition to net zero.
The Australian Energy Market Operator’s (AEMO) 2022 Integrated System Plan (ISP) identifies the need to deliver approximately 10,000 kilometres of new transmission lines.
The transition will require an unprecedented level of investment in, and build of, transmission to deliver power from newer renewable generation and energy storage services to consumers, that will also provide opportunities for the wider economy.
Market bodies are working to ensure timely investment in appropriate electricity transmission infrastructure and the AEMC is in the process of responding to a third rule change request from the Commonwealth regarding social licence on projects.
Submissions to both rule changes close on 14 July 2023. For more information about the financing arrangements proposed, or to provide feedback, visit the project pages:
- ‘Accommodating financeability in the regulatory framework’ project page
- ‘Concessional finance for transmission network service providers’ project page.
Media: Nicole Stokes, 0401 826 522, media@aemc.gov.au.