Rule Change: Completed

Overview

On 5 September 2024, the Australian Energy Market Commission (AEMC) made a more preferable final rule that improves cost recovery certainty for Transmission Network Service Providers (TNSPs) and provides an incentive to efficiently undertake more early works earlier in the economic assessment process.
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On 5 September 2024, the Australian Energy Market Commission (AEMC) made a more preferable final rule that improves cost recovery certainty for Transmission Network Service Providers (TNSPs) and provides an incentive to efficiently undertake more early works earlier in the economic assessment process.  Focusing on its key aspects, the final rule: 

  • introduces the concept of an early works contingent project application (CPA), which enables a TNSP to seek cost recovery for early works without having completed a regulatory investment test for transmission (RIT-T) and passed AEMO’s feedback loop assessment.
  • introduces a NER definition of early works to guide the AER’s assessment of an early works CPA to provide guidance to TNSPs and protect consumers from inefficient expenditure.
  • embeds a set of principles into the NER that the AER must have regard to when assessing whether to approve the costs of early works.
  • clarifies in the NER that AEMO, in the ISP, can specify examples of early works (and preparatory activities) for actionable ISP projects to provide guidance on beneficial early works to stakeholders.
  • clarifies in the NER that TNSPs are to exclude any incurred early works costs from a RIT-T, but:
         - TNSPs are to include any incurred costs for early works that can be re-sold or utilised for       other projects in the RIT-T
         - transparently document any early works costs in the RIT-T and any subsequent CPA.
  • provides for an immediate commencement date.
  • delays the completion date of the AEMCs review of the ISP framework by two years from 1 July 2025 to 1 July 2027.

The final rule improves transmission planning by enhancing the quality of information available to TNSPs when identifying and assessing transmission investment options during the RIT-T. This will benefit consumers by reducing the likelihood of unnecessary or higher costs being incurred later in the process, such as the costs associated with delays or addressing impacts on communities and the environment. 
 

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Documentation