As part of the Better Regulation reform program, the AER released its capital expenditure incentives guidelines and efficiency benefit sharing scheme on 29 November 2013. The capital expenditure incentives guideline and efficiency benefit sharing scheme give electricity network businesses incentives to spend efficiently and share the benefits of efficiencies with consumers.
Amendments
Incentive Scheme Review 2023
The AER undertook a review of incentive schemes which it completed in 2023. The Capital Expenditure Incentive Guidelines incorporates revisions recommended by the review including:
- application of a lower sharing factor of 20 per cent to any underspend amount greater than 10 per cent of the approved forecast capital expenditure allowance
- new transparency measures which require NSPs to explain variations between capital expenditure forecasts and outcomes
- further guidance on application of the CESS to large transmission projects.
Amended National Energy Objectives
On May 2024, we published our final decision on making minor changes to five AER Guidelines to reflect the addition of the emissions reduction objective to the existing National Energy Objectives (NEO). We have now made these minor changes.
Capital Expenditure Guideline Review 2025
On 26 August 2025, we published our final amendments to the Capital Expenditure Incentive Guidelines.
We undertook a consultative process for amending the Capital Expenditure Incentive Guideline, to take into account the Australian Energy Market Commission’s final rule for managing ISP project uncertainty through targeted ex-post reviews. In addition, this review also considered additional matters that has been raised by stakeholders since our 2023 review of incentive schemes for regulated networks.