January 2003–Sithe and Integral–Avoided transmission use of system payments

Integral Energy and Sithe Australia Power in 2002 invoked the market’s alternative dispute resolution arrangements to resolve a dispute over the payment of avoided transmission use of system (TUOS) payments.

Under clause 5.5 of the code, as amended following our transmission and distribution pricing review, distribution network service providers (DNSPs) must pass through to an embedded generator the amount of customer TUOS charges the DNSP would otherwise have had to pay to a transmission network service provider had the embedded generator not been connected to the DNSP’s network. This is so-called avoided TUOS. The dispute between Sithe and Integral hinged on whether clause 5.5 in itself gives Sithe a right to payment of avoided TUOS by Integral.

A three-member dispute resolution panel, chaired by Sir Anthony Mason AC KBE sitting with GE (Tony) Fitzgerald AC QC and Dr Phillip Williams, issued a binding determination relating to the content of future connection agreements or perhaps modifications to existing agreements, not with altering the rights and obligations of parties to existing agreements, which do not enter into new agreements or perhaps modify existing agreements after the changes to clause 5.5 came into effect. The full text of the panel’s determination is available to download.

The dispute was resolved in just over three months. A notice of dispute was issued on 24 September, and referred to the dispute resolution panel on 30 October, last year. The panel issued its determination to the parties on 8 January 2003.