AER publishes final decision on revised cost thresholds for the regulatory investment tests

The AER today published its final determination on the 2021 cost thresholds review for the regulatory investment test for transmission (RIT-T) and the regulatory investment test for distribution (RIT-D) (collectively RITs). This concludes the 2021 RIT cost thresholds review. This cost thresholds review was conducted in accordance with clause 5.15.3 of the National Electricity Rules (NER).

Our final determination stipulates that if the estimated capital cost of a proposed investment by a transmission or distribution network business in its network:

  • Exceeds $7 million, a RIT-T applies
  • Exceeds $6 million, a RIT-D applies 
  • Falls below $46 million, a RIT-T proponent can skip the ‘project assessment draft report’ consultation step 
  • Falls below $12 million, a RIT-D proponent can skip the ‘draft project assessment report’ consultation step 
  • Falls below $24 million, a RIT-D proponent can include its ‘final project assessment report’ as part of its ‘distribution annual planning report’ 
  • Exceeds $200,000, a network business can combine information in its annual planning report for assets it expects to retire or de-rate 
  • Exceed $2 million, a distribution network business is required to include, in its distribution annual planning report, committed investments that address an urgent or unforeseen network issue. 

These revised cost thresholds will take effect on 1 January 2022.

Background

The NER require the AER to undertake a review every three years of the cost thresholds associated with the RITs to ascertain whether these cost thresholds need to be changed to reflect changes in input costs to maintain their appropriateness. When reviewing the RIT cost thresholds, we also reviewed the cost thresholds under S5.8(g) and S5.8(b2)(4) of the Rules, which concern how distribution businesses should report on committed investments and network assets in their distribution annual planning reports.

On 10 September 2021, we published the draft determination for the 2021 cost thresholds review which was followed by 6 weeks of stakeholder consultation, concluding on 15 October 2021; we received four submissions from stakeholders

Following consideration of the submissions received, the AER published a final determination upholding the decision of the draft determination.

Sector: 
Issued date: 
19 November 2021
AER reference: 
AC 180/21
Contact: 
AER General Inquiries AERInquiry@aer.gov.au