Industry practice application note for asset replacement planning

Sector: 
Status: 
Date initiated: 
7 September 2018
Effective date: 
25 January 2019
Contact: 
AER General inquiries AERInquiry@aer.gov.au
AER reference: 
63054

Overview

On 25 January 2019, the AER published a final version of its industry practice application note to support network businesses in adopting good practice asset replacement planning. The application note aims to give network businesses more confidence that they are meeting the network planning framework in the National Electricity Rules. Providing this confidence will be valuable as industry is improving its transparency around asset retirement, de-rating and replacement decisions under the replacement expenditure rule change.

The application note is a companion piece to our new application guidelines for the regulatory investment tests (RITs), which we finalised in December 2018. The new application guidelines aim to assist network businesses to apply a cost–benefit analysis when making large investment decisions.

While this application note complements the RIT application guidelines, the two documents differ in that the application note stems from collaboration with industry rather than a requirement under the National Electricity Rules. The application note also has a more technical focus for network planners and asset managers that are applying economic assessments to asset replacement decisions, and draws on their experience to date.

After publishing the application note, the AER held a forum on 26 February 2019 to discuss asset replacement planning in the context of the new application note and updated RIT application guidelines. Presentation slides and a discussion summary can be found under AER position.