The Australian Energy Market Commission has released a consultation paper on making changes to the framework for the granting of prudent discounts on electricity transmission network charges in Victoria.

The rule change was submitted by the Hon Lily D’Ambrosio MP – Minister for Energy, Environment and Climate Change, Minister for Solar Homes on 4 September 2020. The Minister requested that the rule change be treated as non-controversial and, consequently, processed on an expedited basis.

The rule change would apply only in ‘adoptive jurisdictions’, which are jurisdictions where the declared network functions of the Australian Energy Market Operator (AEMO) apply. These functions include planning the development of the shared transmission network, contracting with network asset owners to provide transmission services, entering into connection agreements with transmission customers such as industrial energy users and recovering the costs of these activities from customers through transmission network charges. At this time, Victoria is the only such adoptive jurisdiction. 

The prudent discount framework allows certain transmission customers, upon application, to be charged reduced charges, where this would avoid them inefficiently by-passing the transmission network, for example by building duplicate transmission lines or deciding against expanding their operations. This bypassing would reduce funding of the transmission network in an inefficient way, meaning other customers would need to pay more to maintain it in the long-term.
The rule change request is intended to clarify the roles and responsibilities of AEMO as the Victorian transmission network service provider (TNSP) and of declared transmission system operators (DTSOs), which are the parties that own the assets forming the transmission network in Victoria, with regards to prudent discounts.

The rule change seeks procedural changes to the way in which an application for a prudent discount would be handled, given the different allocation of functions in Victoria as compared to other jurisdictions, where TNSPs own the assets forming the transmission network.

The key dates for stakeholders in this process are as follows:

  • Initiation of rule change process and publication of this consultation paper: 8 October 2020
  • Written requests not to use the expedited process to be received by: 22 October 2020
  • Submissions to the consultation paper to be received by: 5 November 2020
  • Publication of the final rule determination and final rule (if made): 3 December 2020

Media: Kellie Bisset, Media and Content Manager, 0438 490 041