AER receives notification of RIT–D dispute from EUAA

The Australian Energy Regulator (AER) received a dispute notice on 2 July from the Energy Users Association of Australia (EUAA) disputing how Ausgrid applied its Regulatory Investment Test for Distribution (RIT–D) for an investment it is proposing in the Sydney CBD.

The dispute concerns Ausgrid’s estimated value of customer reliability (VCR), which measures the value that electricity consumers place on avoiding electricity outages. The EUAA disputes that Ausgrid’s VCR estimate of $170/kWh is inconsistent with the estimate of $90/kWh that TransGrid recently used when applying a similar cost–benefit analysis to its ‘Powering Sydney’s Future’ project in Sydney CBD. Given this, the EUAA has raised a dispute under Clause 5.17.5 of the National Electricity Rules (NER).

The RIT–D is a cost‒benefit analysis that distribution businesses apply before making network investments in excess of $5 million. The purpose of the RIT–D is to identify the network or non-network investment option with the highest net economic benefits across the National Electricity Market. This promotes efficient investment decisions and helps ensure that consumers pay no more than necessary for electricity network infrastructure.

Under the dispute resolution framework set out in the NER, the AER has 40 days to make a decision on the dispute. We can extend this timeframe to up to 100 days.

Our role in the dispute resolution process is to assess the distribution business’s compliance with the RIT‒D and NER rather than to undertake a full merits review. If we identify non-compliance, we may decide to direct the Ausgrid to amend its final report under the RIT‒D so it analysis meets the requirements of the NER.

We are currently assessing the dispute grounds raised by the disputing party and will make a decision within the timeframe set out in the NER.

Issued date: 
6 July 2018
AER reference: 
AC 89/18
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