On 1 August 2024, the Australian Energy Market Commission (AEMC) published a final determination and more preferable final rule that would enable the Australian Energy Regulator (AER) to carry out separate, targeted ex post reviews of capital expenditure (capex) for Integrated system plan (ISP) projects and non-ISP projects.

Separate, targeted ex post reviews support better outcomes for consumers by:

• encouraging TNSPs to undertake efficient capex on ISP projects, and
• better enabling the AER to prevent TNSPs from charging consumers for inefficient and imprudent capex overspends.

The final rule improves certainty for TNSPs that the AER would only consider adjusting the amounts that would be recovered from consumers for:

• non-ISP capex, where there has been an overspend on non-ISP projects, and
• ISP capex, where there has been an overspend on an ISP project. The AER would review the total capex incurred for a completed ISP project.

The rule change was fast tracked

The rule change was fast tracked rule due to the comprehensive consultation carried out through the course of the Transmission planning and investment review (TPIR) and the consistency of the rule change request with TPIR.

Rule change request

On 6 December 2023, the AEMC received a rule change request from the Honourable Chris Bowen, Minister for Climate Change and Energy.

The proposed rule change seeks to manage ISP project uncertainty through enabling the AER to undertake separate, targeted ex post reviews of capex for ISP and non-ISP projects.