TransGrid's revenue cap determination did not allow for the recovery of the costs associated with investment in approved contingent projects until the next revenue reset period. This decision ensures that efficient investment in contingent projects can be recovered within one year of it being incurred. The Commission's view is that this derogation would contribute to the NEM objective by removing barriers to necessary investment in the transmission network by TransGrid. This Rule was made on 27 July 2006 and commenced on that date.

Background

On 16 September 2005, TransGrid submitted to the Commission a Rule change proposal for a participant derogation. TransGrid's current revenue cap determination does not allow for the recovery of the costs associated with investment in approved contingent projects until the next revenue reset period. The purpose of the TransGrid proposal is to ensure that efficient investment in contingent projects can be recovered within one year of it being incurred.

Under s.94 of the National Electricity Law (NEL), the Commission commenced initial consultation on this Rule change proposal by publishing a notice under s.95 of the NEL on 20 October 2005. The Commission published its draft determination and draft Rule on 19 January 2006. Submissions were due to close on 3 March 2006; however as a result of an error occurring during publication of the draft Rule, the Commission considered it in the public interest to extend the time period for submissions by a further six weeks to 19 April 2006.

Given the potential overlap with the outcomes of the transmission revenue and pricing review, the Commission was of the opinion that making a final determination on the Rule was not possible until the analysis being undertaken as part of the review is further progressed and the review’s recommendations are clarified. In the Commission’s opinion, releasing a final determination on the draft Rule prior to the finalisation of the draft Rule for revenue requirements would not be in the public interest.

Due to the extension of the date for the publication of the revenue requirements draft Rule, the Commission issued an additional notice under section 107 of the NEL extending the period for it to publish a final determination in relation to this Rule change proposal. The Commission had previously published a section 107 notice on 11 May 2006, extending the publication date until 29 June 2006.