AER - CBA RIT Guideline review - explanatory statement - 9 August 2024

The AER has published proposed amendments to the cost benefit analysis (CBA) guidelines and application guidelines for regulatory investment tests (RIT-T & RIT-D) and instrument documents. 

The CBA and RIT guidelines provide guidance to proponents conducting a RIT, which is a cost-benefit test that network businesses must undertake before building electricity network infrastructure.  The Australian Energy Market Operator also uses the CBA guidelines in developing the Integrated System Plan (ISP) in its national planning function for the National Electricity Market (NEM).

The release of our amendments to the guidelines followed the conclusion of our first round of consulting on the major topics of our consultation paper. The feedback we received from the public forums we held and from written submissions influenced how the amendments were integrated into the guidelines. Further information can be found in the explanatory note accompanying the draft amendments.

Our amendments addressed:

• the implementation of changes in emissions and valuing emissions reduction as a market benefit in the CBA and RIT process;
• sharing concessional finance benefits with consumers;
• necessary amendments to action improving the workability of the feedback loop.
• addressing early works contingent project applications before the completion of the RIT process.
• changes to social licence and community engagement.
• other administrative changes and updates to the guidelines.

We hosted topic-specific information sessions providing an overview of the proposed amendments, including:

• how we have taken into account stakeholder submissions received in response to the consultation paper including feedback heard at the public forums in May and June 2024, and
• to assist stakeholders in developing their written submissions to draft amendments.