AER to review application guidelines for its regulatory investment tests for network investments

The Australian Energy Regulator (AER) today commenced the review of the application guidelines for its regulatory investment tests (RITs).

The RITs are cost–benefit analyses that network businesses must perform and consult on before making major investments in their networks. When undertaking RITs, network businesses must give due consideration to what options are out there, before identifying the best way to address needs on their networks.

We currently have separate RITs for transmission and distribution networks ― the ‘RIT–T’ and ‘RIT–D’. Each RIT has its own application guidelines to guide businesses on how to apply the RITs consistently and transparently.

While we last updated the application guidelines for the RITs in September 2017, this update was limited to changes necessary to give effect to ‘the repex rule change' that we had initiated to expand the scope of RITs to replacement expenditure. At this time, we announced our intention to commence a larger scale review of the RIT application guidelines before the end of 2017.

Our review of the RIT application guidelines will explore improvements that:

  • the Council of Australian Governments (COAG) Energy Council identified in its RIT–T review;
  • have arisen out of the repex rule change;
  • have been identified out of ongoing applications of the RITs; and
  • stakeholders identify throughout this review.

An issues paper is expected to be published in February 2018 to seek stakeholder views on how we can improve the existing RIT application guidelines. Our issues paper will be followed by a series of stakeholder engagement events, before we finalise the review in September 2018.

Issued date: 
15 December 2017
AER reference: 
AC 176/17
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