Transmission network service providers (TNSPs) will be provided the opportunity to directly recover the cost of the Australian Energy Market Operator’s (AEMO) participant fees for a transitional period, under a more preferable final rule from the Australian Energy Market Commission (AEMC).
AEMO recovers its costs from industry participants based on the extent to which participants are involved in AEMO’s activities, through ‘participant fees’. Participant fees include recovery of various expenses, including those related to the operation of the national electricity market, power system security and reliability, major reform initiatives and incremental services.
Transmission network service providers will, for the first time, be charged a portion of AEMO’s participant fees (excluding National Transmission Planner function fees), from 1 July 2023.
The AEMC’s final rule puts in place temporary cost recovery arrangements to allow TNSPs to directly recover the costs of AEMO’s participant fees from customers.
Following the transitional period, TNSPs will have a reasonable opportunity to recover the cost of AEMO’s participant fees using existing mechanisms under the incentive based regulatory framework.
AEMC Chair Anna Collyer said the arrangements strike a balance between helping to ensure a reliable supply of energy and keeping down long-term costs for customers.
“As the market continues to grow and change, AEMO’s role is expanding, with an increasing number of AEMO’s activities involving TNSPs and this has resulted in a portion of AEMO’s costs being allocated to them,” Ms Collyer said.
“The temporary cost recovery arrangements in the final rule allow TNSPs to directly recover participant fees in the immediate short term, providing certainty.
“Once the temporary direct cost recovery measures end, the fees will be incorporated in the AER’s revenue determinations, providing an incentive for network service providers to assist AEMO in minimising costs, which is in the long-term interests of consumers.
“Historically, AEMO’s participant fees have represented a small component of a customer’s electricity bill, at much less than 1 per cent.”
The new rule will allow transmission network service providers to directly recover the cost of AEMO’s participant fees for the following periods:
- AusNet Services and Powerlink - four years from 2023-24 to 2026-27
- ElectraNet and Transgrid - five years from 2023-24 to 2027-28
- TasNetworks - six years from 2023-24 to 2028-29.
The rule will commence on 27 October 2022.
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