Following further analysis and consideration of the issues raised in submissions on the draft Rule, the Commission determined not to make the proposed Rule or any other Rule as it considers the requirements of the Rule making test are not satisfied.

Background

The Commission received a Rule change proposal from Stanwell Corporation dated 17 May 2006 regarding the establishment of a comprehensive inter-participant framework for addressing network replacement or reconfiguration. Stanwell submitted a refinement of the proposal on 2 June 2006, which included a request that it be expedited under section 96 of the NEL.

Stanwell proposed the establishment of a framework in the Rules which would take into account the impact of network reconfiguration or replacement on network users who have reasonably relied on the existing configuration of the network in making investment decisions. In part, this framework would require that the Regulatory Test be undertaken not only in the context of augmentation, but also where there is a network replacement or reconfiguration. On 10 July 2006 Stanwell made a submission suggesting a number of amendments to its proposal, including the narrowing of the scope of the proposal to only include network reconfigurations.

On 15 June 2006 the Commission decided to commence initial consultation on this Rule change proposal by publishing the notice under section 95 of the NEL.

Despite a request for expedition of the process from Stanwell, the Commission did not consider the proposed Rule fell within the requirements for a non-controversial or urgent Rule under the NEL. Therefore, the Rule Change proposal followed the full consultation process.

First round submissions on the Rule proposal closed on 31 August 2006, having been extended from 17 July 2006 in order to give sufficient time for stakeholders to comment on Stanwell’s revised proposal.

The Commission published a draft Rule and draft determination in relation to this proposal on 26 October 2006. The Commission’s draft Rule incorporated a number of modifications to Stanwell Corporation’s original proposal which the Commission believed would more effectively promote the NEM objective.

The draft Rule broadened the application of the Regulatory Test to include large scale reconfiguration and replacement investments, and adopted the information disclosure and consultation regime currently required under the Regulatory Test. The compensation regime proposed as part of the Rule change was not included in the draft Rule. The reasons for the Commission’s draft decision are outlined in the draft Rule determination, available below.

Submissions in response to the draft Rule closed on 21 December 2006. No request for a pre-determination hearing was received by the Commission.

The Commission published a notice under s.107 of the NEL advising that the publication date for the final determination in relation to this proposal had been extended until 1 March 2007. Submissions received by the Commission in response to the draft Rule had raised a number of complex technical and administrative issues. This extension was to permit more detailed analysis of these issues and was therefore considered by the Commission to be in the public interest.

On 1 March 2007 the Commission gave notice under s.102 of the National Electricity Law of its final Rule determination in relation to the proposed National Electricity Amendment (Transmission network replacement and reconfiguration) Rule 2006. Following further analysis and consideration of the issues raised in submissions on the draft Rule, the Commission determined not to make the proposed Rule or any other Rule as it considers the requirements of the Rule making test are not satisfied. The main reasons for this decision are:

• the Commission concluded that some of the issues in the draft Determination are matters that need to be addressed in the context of a focused review of the Regulatory Test, rather than in the particular context of the Rule proposed by Stanwell;
• the appropriate threshold for application of the Regulatory Test would be best considered by the Commission through a Rule change proposal directly related to that matter, and
• the proposed information requirements developed in the draft Rule should also be considered in the context of a wider review of the provision of information in relation to the application of the Regulatory Test, and were ancillary to the Rule proposed by Stanwell.

Further details on the Commission’s decision are set out in the Rule determination.