Compliance Bulletin No.10: Determining whether proposed replacement capital expenditure constitutes a RIT-D project

Compliance bulletin
Release date: 
25 November 2021


On 25 November 2021, the AER published a compliance bulletin to support distribution network service providers (DNSPs) in understanding when a regulatory investment test for distribution (RIT-D) is required for replacement capital expenditure (repex) investment decisions.

This compliance bulletin confirms that the RIT-D applies to all repex investments, except where an exemption applies under clause 5.17.3(a) of the Rules. Completing a RIT-D for eligible repex projects will ensure that DSNPs select the best investment option to deliver the most efficient outcome in the long-term interest of consumers.

DNSPs are encouraged to view Compliance Bulletin No 10, ‘Determining whether proposed replacement expenditure constitutes a RIT-D project’, to clarify the Australian Energy Market Commission’s rule to extend the RIT-D to include repex decisions.

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In 2017, a rule determination by the Australian Energy Market Commission gave effect to extend the RIT-D to include repex decisions. This rule change sought to improve transparency of repex decisions in circumstances where technological changes mean that, in some cases, non-network solutions are becoming more viable alternatives to replacing network assets.