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.
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:
- 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.
- Under a non-contestable process, a Network Operator is directly selected by the Infrastructure Planner to construct and operate the network infrastructure project.
A contestable process may also be used to select a person who will assist a Network Operator in carrying out a network infrastructure project.
The AER has published a guideline setting out how we will undertake the Transmission Efficiency Test and make revenue determinations under the contestable process.
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.
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 has published a draft guideline setting out how it will undertake the contribution determination process. We will publish a final guideline in September 2022.
Approve a risk management framework
The AER must approve a risk management framework developed by the Consumer Trustee under the EII Act. On 8 July 2022, the AER approved the risk management framework published below.
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. Over the past several months, the Consumer Trustee shared its tender rules with the AER, and feedback was exchanged between the AER and Consumer Trustee.
For enquiries regarding the AER's regulatory functions for NSW Renewable Energy Zones please email AERinquiries@aer.gov.au.