The AER is developing an industry practice application note to support network businesses in adopting best 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.
We discussed our draft application note with industry and other stakeholders in a forum on 25 September 2018. After we consider written submissions on our draft application note, we will publish the final application note as a companion piece to our new application guidelines for the regulatory investment tests, which we will finalise around late November 2018. The new application guidelines will better assist network businesses to apply a cost–benefit analysis when making large investment decisions.
While this application note will complement our new regulatory investment test 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 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.