Regulation of large transmission projects

Sector: 
Segment: 
Status: 
Date initiated: 
17 November 2020
Effective date: 
1 April 2021
Contact: 
Transmission Investment Regulation review TIRreview@aer.gov.au

Overview

The AER has commenced a program of work to support the efficient and timely delivery of large transmission projects, identified as ‘actionable’ in AEMO’s Integrated System Plans (ISPs). The work program includes:

  • Delivery of non-binding guidance to improve the predictability and transparency of the contingent project application process, project staging, and ex-post measures for actionable ISP projects. The guidance will complement and support our existing guidelines.
  • Exploration of other opportunities to amend the regulatory framework to further improve the assessment and/or delivery outcomes of actionable ISP projects in the medium to longer term.

The recent reforms to make the ISP actionable have changed the way transmission planning is undertaken. AEMO’s 2020 ISP identifies a number of actionable projects which it forecasts to cost between $6.8 and $12.7 billion over the period 2022-32. The magnitude of this investment in large non-recurrent transmission projects is unprecedented, particularly when compared to the current transmission regulatory asset bases ($21.4 billion), which have remained relatively stable over the past decade.

Given these circumstances, we want to ensure our regulatory tools remain fit-for-purpose to effectively assess forecast expenditure for these projects against the criteria set out in the National Electricity Rules. This will promote the efficient and timely delivery of actionable ISP projects, and ensure consumers pay no more than necessary for these large projects, consistent with the National Electricity Objective.

On 17 November 2020, we published a letter outlining this program of work and setting out our initial views on three guidance notes, to facilitate early stakeholder engagement. Alongside the letter we published a report by HoustonKemp, which we used to inform our work program and initial views. HoustonKemp’s report scopes the challenges and reform options associated with assessing large transmission projects under the regulatory framework.

Draft guidance note and stakeholder workshop

On 18 December 2020, we published a draft guidance note that will assist stakeholders in understanding how we intend to regulate large transmission projects (identified as ‘actionable’ in AEMO’s ISP). 

We invite stakeholders to provide feedback on the draft guidance note by 5pm AEDT on 5 February 2021. Stakeholders can send written submissions electronically to TIRreview@aer.gov.au.

Additionally, we invite stakeholders to register for a public webinar on the draft guidance note, to be held on 28 January 2021. The purpose of this webinar is to provide information on the draft guidance note and seek stakeholder feedback.

For further details please see our draft decision page.