AER receives notification of RIT-T dispute from PIAC

The Australian Energy Regulator (AER) has received a notification from the Public Interest Advocacy Centre (PIAC) disputing conclusions made in TransGrid’s Project Assessment Conclusions Reports (PACR) for the following regulatory investment tests for transmission (RIT-T):

  1. Maintaining Reliable Supply to the North West Slopes Area (‘NWSA PACR’); and
  2. Maintaining Reliable Supply to the Bathurst, Orange and Parkes Areas (‘BOP PACR’)

PIAC raised the dispute on 26 July 2022 (received by AER on 1 August 2022) under clause 5.16B of the National Electricity Rules (NER) on the grounds that it believes that Transgrid may have incorrectly applied the RIT-T in both the NWSA PACR and the BOP PACR. In particular, PIAC outlines that:

  • The scenarios used to assess the costs and market benefits for each credible option are not reasonable, or have not been reasonably weighted, because the assumptions and inputs relating to network capital costs, demand forecasts, VCR and discount rates, are incorrect, implausible or outside of what can be assumed with reasonable confidence.
  • The use of these incorrect or implausible assumptions, and the unreasonable weighting of the scenarios, may have materially influenced timing of investment, ranking of the credible options and basis for any investment.

The RIT–T is a cost‒benefit analysis that transmission businesses apply before making network investments in excess of $7 million. The purpose of the RIT–T 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, disputes can be raised within 30 days of the project proponent publishing the PACR(s). This was the only dispute raised for Transgrid’s NWSA PACR and the BOP PACR during the 30-day period, which ended on 1 August 2022.

The AER now has 40 calendar days to make a decision on the dispute. The AER may extend this timeframe to up to 100 calendar days.

The AER’s role in the dispute resolution process is to assess the transmission business’s compliance with the RIT‒T and NER. Where instances of non-compliance are identified, the AER may, as part of its determination, direct the network business to amend its final PACR(s) to ensure the RIT-T is applied in accordance with the requirements of the NER.

The AER is currently assessing the dispute and aims to make a decision within the statutory timeframes.

Issued date: 
25 August 2022
AER reference: 
AC 132/22
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