On 31 October 2013, the AEMC published a final rule determination in respect of the rule change from SP AusNet on the recovery of costs associated with network support service arrangements.

In its final determination, the Commission determined not to make a rule.

The Commission is not satisfied that the proposed changes would promote the National Electricity Objective. This is because the existing rules provide appropriate mechanisms for the recovery of costs associated with network support service arrangements. Network businesses are able to recover the costs of network support service arrangements through the regulatory determination process and in some instances, may also be able to do so through the nominated pass through mechanism. Introducing additional cost pass throughs into the rules would weaken the overall incentive-based approach to regulation.

Background

Rule change request

SP AusNet submitted a rule change request on 17 December 2012 relating to how electricity distribution network businesses recover costs associated with network support service arrangements. SP AusNet sought to introduce a rule that would allow a specific pass through for network support service arrangements that defers the need for augmentation of:

• the distribution network; and
• transmission-distribution connection assets.

A specific network support pass through would give network businesses greater scope to pass the costs of network support services through to consumers.

A network support service arrangement is a type of non-network solution which defers the need for traditional network investment. Under this arrangement, local (or embedded) generation could be contracted by the network service provider to provide a service to address a network constraint. In certain circumstances, a NSP may find it more cost effective to implement a non-network solution to maintain system reliability than expanding its network.

Consultation on the rule change request

On 11 April 2013, the AEMC initiated the rule change process in conjunction with publication of a consultation paper to facilitate stakeholder feedback on the rule change request. Submissions closed on 10 May 2013. The AEMC received four submissions in response to the rule change request, which are available below.

On 27 June 2013, the AEMC extended the period of time for publication of the draft rule determination in relation to the rule change request to 8 August 2013. The extension of time was to allow for further policy analysis to address the issues raised in the rule change request and submissions.

On 8 August 2013, the AEMC published a draft determination to not make the proposed rule from SP AusNet. Submissions on the draft determination closed on 19 September 2013. Four submissions were received in response to the draft determination and are available below.