The Australian Energy Market Commission (AEMC) has published the next arm of its comprehensive review into whether the regulatory framework is flexible enough to enable the timely and efficient delivery of major transmission projects needed to support the fundamental transformation of the energy market towards net zero.    

The options paper prepared for the contestability workstream of the review represents the first step in examining whether increased contestability in the delivery of major transmission projects is likely to deliver benefits to consumers, compared to the provision by monopoly network service providers under the existing regulatory framework.    

The AEMC is seeking feedback on several matters that will inform its assessment of the costs and benefits of increasing contestability in the NEM: 

  • a spectrum of four contestability strawperson options, so that these can be narrowed down to one or two, or a hybrid of the options, to take to an initial high-level assessment later this year 

  • the proposed assessment framework for this workstream, so that assessment criteria can be refined and weighted to assist the choice of options and initial high-level assessment later this year 

  • some of the key considerations for thinking about how to identify projects suitable to contestable delivery

As part of the review, the AEMC is committed to examining whether contestability could provide a proportionate response to the risk of late or non-delivery of major transmission projects. This risk arises from primary transmission network service providers (TNSPs) having an exclusive right, but no corresponding obligation, to invest in transmission infrastructure, including major transmission projects required to underpin the transition to net zero. 

The AEMC is looking at examples of transmission contestability that have delivered benefits to consumers, both in the NEM and internationally. As a starting point, we want to work with stakeholders to understand what is workable in the NEM and whether contestability for major projects could deliver better outcomes for consumers. 

Several jurisdictions in the NEM consider there is merit in contestable frameworks and have already adopted them for certain major transmission projects. We also see value in exploring whether a more consistent national approach to contestability would have benefits. 

A public forum will be held on 26 July 2022 which will provide an overview of key findings and recommendations in the draft report. Interested stakeholders can register for the forum here.   

Stakeholders are invited to make submissions on the options paper for the contestability workstream by 18 August 2022.  

Visit project page for more information and contact details.