NSW Renewable Energy Zones

The NSW Government appointed the AER as a regulator under the NSW Electricity Infrastructure Roadmap. The Commonwealth and NSW have concluded a conferral agreement which formally sets out the AER’s regulator functions. The Governor-General also made an amendment to the Competition and Consumer Regulations 2010 to allow for the conferral.

Agreement - Conferral of functions on the Australian Energy Regulator under the Electricity Infrastructure Investment Act 2020 (NSW) ( PDF 263.93 KB )

Key functions

The key functions the AER has been appointed to perform under the Electricity Infrastructure Investment Act 2020 (NSW) (the Act) include:

Transmission Efficiency Test (TET) and revenue determinations

The AER must undertake a Transmission Efficiency Test and make five-year revenue determinations for Network Operators authorised by the independent Consumer Trustee, or authorised or directed by the Minister, to undertake a network infrastructure project. The Transmission Efficiency Test is to assess whether the capital costs proposed by the Network Operator are prudent, efficient and reasonable. 

The AER must make and publish guidelines on how we will undertake the Transmission Efficiency Test and make revenue determinations under the Act.

The Act and regulations that are currently being developed, will allow for a Network Operator to be selected in one of two ways:

  1. Under a contestable process, a Network Operator is selected through a competitive process, run by the Infrastructure Planner, to construct and operate the network infrastructure project.
  2. Under a non-contestable process, a Network Operator is directly selected by the Infrastructure Planner to construct and operate the network infrastructure project.

The AER has published a draft guideline setting out how we will undertake the Transmission Efficiency Test and make revenue determinations for Network Operators selected through a contestable procurement process undertaken by the Infrastructure Planner.

We will develop a separate guideline on how we will undertake the Transmission Efficiency Test and make revenue determinations for Network Operators authorised or directed through a non-contestable process. We intend to consult on this guideline later in 2022.

Contribution determinations

The AER must make a Contribution Determination to determine the annual amounts to be recovered from each of the NSW electricity distributors (Ausgrid, Endeavour Energy, Essential Energy) to provide for the functions under the Act. These amounts will be passed through to NSW electricity consumers through their retail bills. 

The AER must make and publish a Contribution Determination Guideline setting out how we will undertake this role.

Approve a risk management framework

The AER must approve a risk management framework developed by the Consumer Trustee under the Act.

Provide comments on tender rules for long-term energy service agreements

The Consumer Trustee must consult with the AER on its proposed tender rules for the competitive tender process for long-term energy service agreements or LTES agreements.

For enquiries regarding the AER's regulatory functions for NSW Renewable Energy Zones please email AERinquiries@aer.gov.au.