Cost thresholds review for the regulatory investment tests 2018

  • Accepting submissions
Sector: 
Status: 
Category: 
Regulatory investment test and guidelines
Date initiated: 
31 July 2018
Effective date: 
1 January 2019
Contact: 
General enquiries - RIT RIT@aer.gov.au
AER reference: 
63054

Overview

We are reviewing the cost thresholds for the regulatory investment test for transmission (RIT T) and distribution (RIT D) (collectively, the 'RITs').

When exploring whether to undertake a large network investment, network businesses benefit analysis under a RIT to identify the most efficient investment option. When applying a RIT, network businesses can skip some parts of the consultation process if the large investments they are exploring are still less than a certain size. The RIT cost thresholds determine what constitutes a sufficiently 'large' network investment for these purposes.

Under clause 5.15.3 of the Rules, we review the RIT cost thresholds every three years to reflect changes to input costs. Under the current RIT cost thresholds, if the estimated capital cost of the investment option:

  • exceeds $6 million, a RIT T applies
  • exceeds $5 million, a RIT D applies
  • falls below $41 million, a RIT T proponent can skip the 'project assessment draft report' consultation step
  • falls below $10 million, a RIT D proponent can skip the 'draft project assessment report' consultation step
  • falls below $21 million, a RIT D proponent can include its 'final project assessment report' as part of its 'distribution annual planning report

When reviewing the RIT cost thresholds, we will also review the cost thresholds under S5.8(g) and S5.8(b2)(4) of the Rules, which concern how distribution businesses should report on committed investments and network assets in their distribution annual planning reports.

On 11 September 2018, we published a draft determination as part of our cost thresholds review. After we consider written submissions on our draft determination, we will publish a final decision in November 2018.

Separately, the Energy Security Board (ESB) is coordinating the work of the Australian Energy Market Commission, the Australian Energy Regulator and the Australian Energy Market Operator on planning and regulation of the transmission system and interconnection. This review is not impacted by nor does it impact that coordination of work of the ESB.

Request for submissions

On 11 September 2018, we published a draft determination. We invite stakeholders to provide written submissions on the revised cost thresholds in our draft determination by the close of business 16 October 2018.

We prefer stakeholders send submissions electronically to: RIT@aer.gov.au. Alternatively, stakeholders can mail submissions to:

Mr Sebastian Roberts
General Manager, Transmission and gas
Australian Energy Regulator
GPO Box 520
MELBOURNE VIC 3001

We prefer all submissions be publicly available to facilitate an informed and transparent consultation process. We will therefore treat submissions as public documents unless otherwise requested. We request parties wishing to submit confidential information to:

  • clearly identify the information that is subject of the confidentiality claim; and
  • provide a non-confidential version of the submission, in addition to a confidential one.

We will place all non-confidential submissions on our website at www.aer.gov.au. For further information regarding our use and disclosure of information provided to us, see the ACCC/AER Information Policy.

Please direct enquiries about this paper to RIT@aer.gov.au or to Lisa Beckmann on (02) 6243 1379.