The AER is currently undertaking a large scale review of the application guidelines for the regulatory investment tests (RITs). The RITs are cost-benefit analyses that network businesses must perform and consult on before making major investments in their networks. When undertaking RITs, network businesses must give due consideration to what options are out there, before identifying the best way to address needs on their networks.
We currently have separate RITs for transmission and distribution networks – the ‘RIT-T’ and ‘RIT-D’. Each RIT has its own application guidelines in order to guide businesses on how to apply the RITs consistently and transparently.
While we last updated the application guidelines for the RITs in September 2017, this update was limited to changes necessary to give effect to the the repex rule change that was initiated to expand the scope of the RITs to include replacement expenditure. In December 2017, we commenced a larger scale review of the RIT application guidelines.
Our review of the RIT application guidelines will explore improvements that:
- the Council of Australia Governments Energy Council (COAG EC) identified in its RIT–T review;
- have arisen out of the repex rule change
- have been identified from ongoing applications of the RITs; and
- stakeholders identify throughout this review.
On 20 February 2018, we published an issues paper to provide information on the RIT-T and RIT-D application guidelines in the context of this review. The issues paper provides an indication of our initial views on the effectiveness and limitations of the current RIT guidelines. On 14 March 2018, we held a public forum on Sydney. The public forum gave stakeholders an opportunity to provide input on some of the key issues we are considering as part of this review. See Initiation for a slide pack and summary note from the public forum, as well as submissions on our issues paper. We plan to finalise this review around November 2018.