On the 20 October 2022, the Australian Energy Market Commission (AEMC) made a final determination and a more preferable final rule that amended the National Electricity Rules (NER) in response to a rule change request from Energy Networks Australia (ENA).

The Commission determined that it was both in the long-term interests of consumers and consistent with the National Electricity Law (NEL) revenue and pricing principles to make a more preferable rule allowing TNSPs to recover their allocated shares of the Australian Energy Market Operator (AEMO)’s participant fees (excluding National Transmission Planner (NTP) fees:

• initially by passing them directly through to consumers (as the ENA proposed), as a transitional measure; and
• through existing mechanisms under the incentive-based revenue determination framework, after the transitional period.

The more preferable rule also includes minor amendments to clarify existing rules, so that they work as intended.

The Commission's final rule is a more preferable rule

The key elements of our more preferable rule:

• includes transitional rules to support cost recovery for TNSPs as they transition to incurring the cost of AEMO's participant fees (excluding NTP function fees) for the first time;
• amends the definitions of over-recovery amount and under-recovery amount so TNSPs are able to recover the cost of AEMO's NTP function fees; and
• amends the definition of Co-ordinating Network Service Provider (CNSP) to clarify that the role of CNSPs is broader than only allocating Adjusted Annual Revenue Requirements (AARR).

Our transitional rules allow TNSPs to directly recover the cost of AEMO’s participant fees (excluding NTP function fees) for the following transitional 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 change request 

On 24 June 2021, ENA submitted a rule change request that sought to establish a new mechanism to allow TNSPs to directly pass on the cost of AEMO participant fees (excluding NTP function fees), which will be charged to TNSPs from 1 July 2023.

Key features of ENA’s proposed rule were: 

• amendments to revenue and pricing methodologies to allow for direct cost recovery, rather than recovery through an AER revenue determination, 
• alignment of AEMO’s budgeting process and TNSPs’ publication of transmission charges, and
• clarifying transfer payment arrangements between a CNSP and a TNSP.

Background 

Under the NER, AEMO must publish:

• an annual budget of its revenue requirements by the start of each financial year, and
• a structure setting out how its budgeted revenue is to be recovered through participant fees.
   

AEMO's Electricity fee structure for 2021-26 set nine categories of fees, which included the category of AEMO's core NEM fees. AEMO allocated a portion of core NEM fees to relevant TNSPs between 1 July 2023 and 30 June 2026. TNSP's are not subject to pay core NEM fees until 1 July 2023.