The Rule as Made provides the Australian Energy Regulator (AER) with a one-off extension of one month for it to complete its first Weighted Average Cost of Capital (WACC) Review for electricity transmission and distribution network service providers. Under the Rule as Made, the AER will be able to complete its first WACC Review for transmission and distribution by 1 May 2009 rather than 31 March 2009. The Rule as Made also provides ETSA Utilities, Ergon Energy and ENERGEX with a corresponding one-off one month extension to submit their regulatory proposals to the AER for the regulatory control period of 2010-2015.

The Rule as Made ensures that the AER is able to exercise appropriate regulatory scrutiny in making its final decision in its WACC Review, which is likely to lead to a more rigorous and considered decision by the AER. The Rule as Made also ensures procedural fairness for the affected distributors as it preserves their current two month period to submit their regulatory proposals following the completion of the AER’s WACC Review.

Background

On 16 February 2009, the Commission received a Rule change proposal from the AER. The AER’s Rule change proposal seeks to extend the timeframe for the AER’s completion of its WACC reviews for electricity transmission and distribution network service providers, from 31 March 2009 to 1 May 2009. The AER also requested that its Rule change proposal be treated as non-controversial in nature and expedited under section 96 of the NEL.

On 19 February 2009, the Commission published a notice under sections 95 and 96 of the NEL, advising of its intention to commence first round consultation on the AER’s Rule change proposal and expedite the Rule change process on the grounds that the proposal is non-controversial, subject to the receipt of written objections. The Commission was of the view that the proposed Rule was unlikely to have a significant effect on the National Electricity Market, as it would simply extend the time for the conclusion of the AER’s WACC Reviews.

Written objections to expediting the Rule change process under section 96 of the NEL were due on 6 March 2009. No written objections were received by the Commission by this date. As a result, the AER’s Rule change proposal was expedited in accordance with section 96 of the NEL.

During the consultation process, the Commission received an alternative Rule change proposal from ETSA Utilities. On 10 March 2009, the Commission invited stakeholders to also comment on ETSA Utilities’ Rule change proposal when providing submissions on the AER’s Rule change proposal. Submissions on the AER’s Rule change proposal closed on 20 March 2009.

On 26 March 2009, the Commission gave notice under sections 102 and 103 of the National Electricity Law (NEL) of the making of the National Electricity Amendment (WACC Reviews: Extension of Time) Rule 2009 No. 6 and the corresponding Rule determination. This Rule was made under an expedited process in accordance with section 96 of the NEL.

The Rule as Made:

• provides the AER with a one-off extension of one month for it to complete its first WACC Review for electricity transmission and distribution network service providers. Under the Rule as Made, the AER will be able to complete its current WACC Review for transmission and distribution by 1 May 2009 rather than 31 March 2009. Subsequent WACC Reviews by the AER must be concluded by 31 March; and
• provides ETSA Utilities, Ergon Energy and ENERGEX with a corresponding one-off one month extension to submit their regulatory proposals to the AER for the regulatory control period of 2010-2015. These distributors will now be able to submit their regulatory proposals to the AER for the regulatory control period of 2010-2015 by 1 July 2009 rather than 31 May 2009. The timing for ETSA Utilities, Ergon Energy and ENERGEX to submit subsequent regulatory proposals to the AER will be unaffected by the Rule as Made.

The Rule as Made commenced on 31 March 2009.