The Commission gave notice on 15 March 2007 of the making and commencement of the National Electricity Amendment (Transmission Last Resort Planning) Rule 2007 No.3. The Rule as made largely reflects the Rule to be made which was attached to the Commission’s final Rule determination with some minor editorial amendments.

Background

On 12 October 2005 the Australian Energy Market Commission received a request from the Ministerial Council on Energy pursuant to section 91 of the National Electricity Rules proposing for the AEMC to have a Last Resort Planning Power "LRPP". The LRPP proposal gives the AEMC the power to direct certain market participants to take the Regulatory Test for transmission investment under certain circumstances.

Under section 94 of the NEL the Commission decided to commence initial consultation on this Rule change proposal by publishing a notice under section 95 of the NEL.

The Commission issued a notice in accordance with section 107 of the National Electricity Law (NEL), extending the period of time for it to publish a draft determination in relation to this Rule proposal, which was due on 21 April 2006. The Commission considered that it would be difficult to make a determination on the various fundamental issues of this Rule proposal until the recommendations and consultations of the congestion management review and the transmission revenue and pricing review had been clarified. The revised date for publication of the draft determination was 23 November 2006.

In addition, the Commission published a notice under section 107 of the NEL on 6 April 2006 in relation to this Rule change proposal. The previous notice contained an error in that it extended the period of time for the Commission to publish a final determination. The Commission however intended to extend the period of time to publish a draft determination to 23 November 2006.

On 23 November 2006, the Commission gave notice under section 99 of the NEL of the making of the draft Rule determination for this proposal. The draft Rule determination fundamentally accepts the MCE proposal subject to some enhancements and modifications including:

• The inclusion of a purpose clause which expresses the purpose of the LRPP;
• A requirement to develop LRPP guidelines to provide information on the Commission’s proposed approach to exercising the LRPP, and a requirement that the Commission exercise the LRPP in accordance with the published guidelines;
• A requirement that the Commission seek the advice of the Reliability Panel when identifying a potential transmission project;
• Inclusion of the Commission’s power to direct a Registered Participant to identify a potential transmission project where the Commission cannot or does not identify a specific transmission project;
• Requirement on the Commission to annually publish a report which documents the matters that the Commission has considered during the year in deciding whether to exercise the LRPP;
• Provision to allow the Commission to direct one or more Registered Participants to apply the Regulatory Test; and
• The Commission may include consultation and publication requirements on the Registered Participants in addition to the consultation and publication requirements under the Regulatory Test.

The Commission removed some provisions from the proposed Rule including: i) the requirement for the Commission to consider whether the potential transmission project has previously been subjected to the Regulatory Test, ii) a requirement that the directed party publish a report regarding the application of the Regulatory Test and also to seek a determination from the AER that the project satisfies the Regulatory Test. These requirements have been excluded from the draft Rule as the Commission considers they are either too difficult to apply or are already provided for in the Regulatory Test itself.

The reasons for the Commission’s decision are contained in the draft Rule determination.

Submissions on the draft Rule determination and draft Rule closed on 29 January 2007.

The Commission issued a notice in accordance with section 107 of the National Electricity Law (NEL), extending the period of time for it to publish a final determination and Rule in relation to this Rule proposal. The Commission considered that it required more time to consider some of the complex fundamental issues of this Rule proposal and that it was in the public interest that the Commission took more time to analyse and assess the issues. The revised date for publication of the final determination and Rule was 8 March 2007.

The Commission gave notice on 8 March 2007 under section 102 of the NEL of the making of the final Rule determination on the National Electricity Amendment (Transmission Last Resort Planning) Rule 2007. The Rule determination affirmed the Commissions draft Rule determination with some modifications and enhancements which included:

• permitting the Commission to appoint the Inter-Regional Planning Committee to perform this role, of which NEMMCO is a member (clause 5.6.4(e));
• expanding on the list of matters that the Commission must have regard to when deciding whether or not to exercise the LRPP (clauses 5.6.4(g)(3) and (4) and 5.6.4(h));
• not requiring the Commission to have regard to the likely costs of the directed party or directed parties in applying the Regulatory Test before it exercises the LRPP;
• requiring the Commission to publish notice of the giving of a direction notice (clause 5.6.4(k));
• permitting the Commission to inform the AER of a directed party’s failure to comply with the direction notice (clause 5.6.4(m)(2)); and
• prescribing a non-exhaustive list of matters to be addressed in the LRPP guidelines (clause 5.6.4(o)).

The Commission gave notice on 15 March 2007 of the making and commencement of the National Electricity Amendment (Transmission Last Resort Planning) Rule 2007 No.3. The Rule as made largely reflects the Rule to be made which was attached to the Commission’s final Rule determination with some minor editorial amendments.