Review of the application guidelines for the regulatory investment tests for transmission and distribution

Sector: 
Category: 
Regulatory investment test and guidelines
Status: 
Date initiated: 
15 December 2017
Effective date: 
14 December 2018
Contact: 
General enquiries - RIT RIT@aer.gov.au
AER reference: 
63054

Overview

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;
  • can guide stakeholders on how to account for recent policy and regulatory changes (such as the inaugural Integrated System Plan) and
  • stakeholders identify throughout this review.

On 27 July 2018, we published draft amendments to the RIT application guidelines for consultation. The submission period on the draft RIT application guidelines closed 7 September 2018. On 29 August 2018, we held a discussion forum across AER/ACCC offices on our proposed amendments in the draft RIT application guidelines. See Draft Decision for a slide pack and summary note from the discussion forum, as well as the submissions we received on the draft RIT application guidelines.