Rule Change: Completed
The Commission made a more preferable final rule to facilitate more efficient investment in, and use of, transmission assets built to connect generation to the ‘shared’ network. This is achieved through more effective protections for parties investing and clearer arrangements for sharing these assets.
With the large number of new generators currently seeking to connect to the transmission network, the Commission considers that these changes come at an important time. The final rule includes implementation provisions to allow it to take effect quickly and therefore provide benefits in the short term to parties already assessing business cases including transmission assets to connect generation to the network.
Correction in final determination
Correction of Figure E.1 in Appendix E Implementation, savings and transitional arrangements on page 148 of the final determination: substitute “connection application” in the green box on the top right with “connection enquiry”.
The final rule establishes a new framework for 'designated network assets' (DNAs). The new arrangements will replace the current arrangements for 'large dedicated connection assets’ (DCAs) to treat material additions to the transmission system (i.e. those including transmission lines with a total route length of 30km or more) as part of the transmission network, rather than as connection assets. Only 'small DCAs' (i.e. transmission lines with a total route length of less than 30km) will continue to be treated as connection assets unless they voluntarily chose to opt into the DNA framework.
The key features of the more preferable final rule are:
Application of existing NEM arrangements at individual transmission network connection points
As DNAs will form part of the transmission network, operated by a Primary Transmission Network Service Provider (TNSP), the point where an individual facility connects to a DNA will be a transmission network connection point (TNCP). This allows for the application of existing arrangements for settlement, metering, calculation of loss factors, transmission use of system charges, system strength and performance standards, with only minor modifications.
Application of a special third-party access regime
DNAs will not be subject to the open access regime that applies elsewhere on the transmission network. Instead, a DNA owner, i.e. the party that made the investment and funded the asset, is responsible for administering third-party access to its DNA. This will provide appropriate protections for the DNA owner and incumbent connected parties.
In the absence of broader access reforms across the shared network as a whole, the special access regime can only be provided on radial transmission assets. The final rule therefore limits DNAs to radial configurations.
Slight reduction of contestability
As DNAs are part of a Primary TNSP's network, the Primary TNSP is responsible for operation, maintenance and setting the functional specifications of these assets. However, DNAs can be contestably designed, constructed and owned.This represents a slight reduction in contestability compared to the existing arrangements for large DCAs.
However, this is an unavoidable consequence of making these assets part of the Primary TNSP’s network in order to facilitate the establishment of individual TNCPs on these assets.
The rule change request
On 3 January 2020 the AEMC received a rule change request from AEMO which seeks to amend the National Electricity Rules (NER) to clarify the framework for transmission connections through a DCA. AEMO requested changes to the current Rules to address issues that arise when multiple facilities seek to connect to the same DCA. This is because many NER obligations and processes are unable to work where a one-to-many relationship is required at a single connection point.
The rule change request seeks to address this issue by providing for there to be a separate TNCP for each facility, located at the point where the facility connects to a DNA. However, the point where the DCA connects to the transmission network would continue to also be a TNCP.
As DCAs are not part of the transmission network, the Commission – in common with many stakeholders – is concerned that establishing TNCPs on a DCA would blur the boundary between network and connection assets.
The framework for DCAs was established through the AEMC’s 2017 Transmission Connection and Planning Arrangements (TCAPA) Rule. The framework applies throughout the national electricity market (NEM) except in Victoria, which is subject to different transmission arrangements. DCAs are privately owned and operated connection assets that provide the services required to connect a party to the shared transmission network. A DCA connects a party to the shared transmission system at a single TNCP and can be isolated from electricity flows on the shared transmission network, e.g. the power line that connects parts of a substation to a generating system.
The consultation process
On 5 March 2020, the Commission published a notice advising of its commencement of the rule making process and consultation in respect of the rule change request.
A consultation paper identifying specific issues for consultation was also published. Submissions closed on 2 April 2020. The Commission received 17 submissions as part of the first round of consultation.
Further, the AEMC held two stakeholder webinars following receipt of submissions to discuss the Commission's emerging thinking. The first stakeholder webinar was held on 7 July 2020 and the second was held on 6 October 2020.
A draft rule and draft determination were published on 26 November 2020. Submissions closed on 28 January 2021. The Commission received 22 submissions as part of the second round of consultation.
Further, the AEMC held a stakeholder round table on 25 March 2021 to discuss the issue of the DNA access regime with TNSPs, renewable energy developers, generators, large load customers, and government bodies who have extensively participated throughout this rule change process.
Section 108A report
The Commission is required under s. 108A of the National Electricity Law (NEL) to publicly report on rules not made within 12 months of the publication of the notification of the commencement of the rule change process. The final rule determination had not been made within 12 months of the publication of the notice under s. 95 of the NEL because:
- Detailed and complex nature of issues raised by the rule change request: To ensure application of key NER requirements at individual TNCPs on a DCA as proposed by AEMO, significant changes were necessary to the existing regulatory framework. As DCAs are ‘connection assets’ and not ‘transmission network’, the establishment of TNCPs for each connecting party requires changes in the regulatory treatment of these assets and the underlying contestability arrangements.
- Scope of the rule change request expanded significantly: Sufficient time was required to draft the amendments to Chapters 2, 3, 4, 5, 6A, 8 and 10 of the NER.