AER consults on draft guideline for contestable network projects in NSW

The Australian Energy Regulator (AER) is seeking feedback on our draft guideline that sets out how we will make revenue determinations for network operators competitively selected to carry out network projects under the NSW Electricity Infrastructure Roadmap.

We’ve been appointed to undertake this role under the NSW Electricity Infrastructure Investment Act 2020 (EII Act). Our draft guideline sets out how we intend to determine that the amounts to be paid to network operators for constructing and maintaining these projects are efficient, as these amounts will ultimately be recovered from NSW electricity consumers through their retail bills.

The contestable approach, allowed under the EII Act, permits a different revenue determination process to the one we use under the National Electricity Rules. It focuses on us assessing whether the competitive procurement process is likely to have produced a ‘prudent, reasonable and efficient outcome’ and, if so, adopting that outcome in our determination rather than undertaking a detailed review of components of a revenue proposal.

Our draft guideline reflects policy positions that have been developed by the NSW Office of Energy and Climate Change (OECC).

The OECC has today published a document providing an overview of the policy framework within which the AER will undertake its role, and a number of policy positions to support the contestable approach. This document should be read in conjunction with our draft guideline.

The AER is also developing a guideline for our approach to non-contestable network infrastructure projects under the EII Act, which is intended to substantially reflect the approach to economic regulation for transmission businesses under the National Electricity Rules. We will release that guideline for consultation later in 2022.

Consultation

Consultation on the draft guideline is open until Friday 27 May 2022. Feedback will be used to inform the final guideline, due to be published in July 2022.

We will also hold a joint public forum with the OECC to allow stakeholders the opportunity to ask questions about our draft guideline. The public forum will be held on Tuesday 17 May 2022 from 11.00 am to 12.30 pm (AEST). To register for the public forum, please send a request to REZ@aer.gov.au by close of business,  Monday 16 May 2022 .

If providing a written submission, we prefer it be publicly available to facilitate informed and transparent consultation. We will treat written submissions as public documents unless otherwise requested.

Background

The AER exists to ensure energy consumers are better off, now and in the future. We are the economic regulator for electricity and gas networks in every state and territory in Australia except Western Australia. We regulate electricity networks under the National Electricity Law and National Electricity Rules. We also regulate natural gas pipelines under the National Gas Law and the National Gas Rules.

On 12 November 2021 we were appointed as a Regulator under the NSW Electricity Infrastructure Investment Act 2020.

Sector: 
Issued date: 
6 May 2022
AER reference: 
AC 77/22
Contact: 
General enquiries - REZ, General enquiries - REZ REZ@aer.gov.au