This outline explains how we use the repex model in our assessment of electricity distributors’ capex proposals. The outline describes the data that we use in the repex model, the key assumptions underpinning our repex modelling approach and the repex model outcomes under different scenarios.
The repex model is a statistical tool used to conduct a top-down assessment of a distributor’s repex forecast. We analyse discrete asset categories within the following six broader asset groups: poles, overhead conductors, underground cables, service lines, transformers and switchgear.
We use the repex model to advise and inform us where to target a more detailed bottom-up review, and as a starting point for our substitute repex forecast if necessary.
In November 2012 the AEMC published changes to the NER and NGR in the Final rule determination: National electricity amendment (Economic regulation of network service providers) Rule 2012. Following these rule changes, the AER undertook a “Better Regulation” work program, which included publishing Better regulation: Expenditure forecast assessment guideline for electricity distribution (the Guideline) in November 2013 which sets out our approach to regulation under the new rules.
The Guideline lists predictive modelling as one of the assessment techniques we may employ when assessing a distributor’s repex. We have used the repex model since 2009–10 and have refined the model over time.