Overview

Final decision - Statement of regulatory principles (SRP)

On 1 July 2005 the AER assumed the Australian Competition and Consumer Commission's (ACCC) responsibilities for the regulation of transmission revenues in the National Electricity Market. In December 2004 the ACCC finalised the statement of regulatory principles (SRP) process by issuing the following documents:

  • Statement of principles for the regulation of electricity transmission revenues—background paper (SRP background paper)
  • Statement of principles for the regulation of electricity transmission revenues (SRP). This document is a consolidated version of the revised regulatory principles set out at the end of each chapter of the SRP background paper.

The statement of principles for the regulation of electricity transmission revenues takes into account submissions and consultation in relation to the August 2003 discussion paper seeking comments on the Draft regulatory principles (released in May 1999) and the draft statement of principles for the regulation of electricity transmission revenues (draft SRP) released in August 2004.

In the SRP, the ACCC took measures to increase certainty of investment for transmission networks through its decisions on the value of the asset base, the capital expenditure (capex) framework and the weighted average cost of capital (WACC). The ACCC also took measures to implement a more incentive-based regime through its decisions on capex and operating and maintenance expenditure. 

Position - Regulatory accounting methodologies

The AER has released a position paper inviting comments from interested parties on two accounting approaches in relation to the recognition of the timing of capital expenditure in a transmission network service provider’s regulatory asset base.

The AER’s Statement of Regulatory Principles does not provide any guidance on this issue and the AER has previously provided flexibility in terms of an accounting approach that may be applied by the TNSP’s. The AER’s preliminary position based on an examination of the issues identified in the paper is to favour an “as-incurred” accounting approach that should be applied by all TNSP’s.