The AER has released its final Transmission Efficiency Test and revenue determination guideline for non-contestable network infrastructure projects (Non-contestable Guideline). This Non-contestable Guideline is a revision to the version published in July 2024. We amended the Non-contestable Guideline to reflect the changes the NSW Government made to the Electricity Infrastructure Investment Regulation 2021 (NSW) (EII Regulation) in 2024 to provide flexibility in the way NSW Roadmap infrastructure projects are able to be delivered. The changes allow the AER to make revenue determinations for network infrastructure projects that combine both contestable and non-contestable components. We refer to these as hybrid revenue determinations.
In amending the Non-contestable Guideline, we have included a new chapter 7 that outlines how for hybrid revenue determinations we intend to approach:
- contestable and non-contestable components
- the application of certain incentive schemes
- adjustment mechanisms
- the making of a hybrid revenue determination
- modifying the steps of the non-contestable process to accommodate contestable competitive assessment processes.
We have also made minor and administrative amendments which incorporate changes to reflect up to date references to the regulatory framework.
We will apply our Non-contestable Guideline when we determine the amounts to be paid to Network Operators for constructing and maintaining non-contestable network infrastructure projects including hybrid projects. This process will assess whether costs are efficient, prudent and reasonable, as these amounts will ultimately be recovered from NSW electricity consumers through their retail bills.