AER releases determination on South Australia Energy Transformation RIT-T dispute

The Australian Energy Regulator (AER) today published its determination in response to a dispute notice lodged by the South Australian Council of Social Service (SACOSS).

SACOSS lodged a dispute in relation to the conclusions made in ElectraNet’s project assessment conclusion report (PACR) for the South Australia Energy Transformation (SAET) regulatory investment test for transmission (RIT-T).

The dispute was raised under clause 5.16.5 of the National Electricity Rules (NER) on the grounds that the SAET RIT-T PACR inadequately addressed the risk of unintended consequences as a result of system security risks associated with the retirement of three South Australian gas plants.

In particular, the SAET RIT-T includes a protection scheme to detect and manage security risks associated with the loss of the Heywood interconnector or the proposed interconnector. SACOSS raised concerns that the PACR provided little detail in relation to the ability of scheme to manage this risk. SACOSS also contended that the market benefits outlined in the PACR may not be achievable if the protection scheme cannot be implemented as required.

Following a review of the dispute, and further information provided by ElectraNet and AEMO, the AER is satisfied that ElectraNet’s application of the SAET RIT-T is in accordance with the NER specifically on the matters raised in the dispute notice. As a result, ElectraNet is not required to amend its PACR for SAET RIT-T. SACOSS and ElectraNet have been informed of this decision.

The conclusion of this dispute allows the AER to formally consider the next step in the RIT-T process, which includes a broader review of the SAET RIT-T under the NER.  An AER decision regarding this is expected to be released in in the second half of 2019.

Background

The RIT–T is a cost‒benefit analysis that transmission businesses apply before making network investments in excess of $6 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.

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

Sector: 
Segment: 
Issued date: 
5 June 2019
AER reference: 
AC 72/19
Contact: 
General enquiries - RIT RIT@aer.gov.au