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.
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 and revenue determinations
The AER must undertake a Transmission Efficiency Test (TET) 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 TET 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 TET and make revenue determinations under the Act.
The Act and regulations 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 TET and make revenue determinations under the contestable process.
We have also published a final guideline on how we will undertake the TET and make revenue determinations for Network Operators authorised or directed through a non-contestable process.
Further to the guideline, we have also published a final guidance note setting out our expectations on how a PTRM issued under the NER framework should be amended to accommodate the EII framework, while remaining as consistent as possible with the NER PTRM.
We are currently consulting on draft NSW REZ supporting guidelines relating to confidentiality, cost allocation and legal and functional separation, as well as a guidance note on incentive schemes. These guidelines support the regulation of network infrastructure projects under the NSW Electricity Infrastructure Roadmap. More information about the guidelines can be found here.
Waratah Super Battery priority transmission infrastructure project
On 14 December 2022, we published a determination for the System Integrity Protection Scheme (battery) Service component of the Waratah Super Battery priority transmission infrastructure project. On 16 June 2023, we made a revenue adjustment decision in relation to our determination.
On 30 June 2023, Transgrid submitted its revenue proposal for the non-contestable components (network augmentation and SIPS control system) of the Waratah Super Battery project for the period 1 July 2024 to 30 June 2029. The AER is currently assessing Transgrid’s revenue proposal. We will make a draft determination by 29 September 2023 and a final determination by 22 December 2023.
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.
Our website's dedicated project area for contribution determinations has more details.
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.
AEMO Services Ltd - Risk Management Framework - July 2022
AER letter to Consumer Trustee - Approval of risk management framework - July 2022 (Signed)_Redacted
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.
AEMO Services Ltd - Draft Tender Rules for LTESAs - June 2022
AER - Letter to Consumer Trustee feedback on LTESA tender rules - 8 March 2022_Redacted
AEMO Services Ltd - Response to AER feedback on LTESA tender rules - 10 June 2022_Redacted
AER - Letter to Consumer Trustee feedback on LTESA tender rules - 14 July 2022_Redacted
AEMO Services Ltd - Response to AER feedback on LTESA tender rules - 25 July 2022_Redacted
On 24 March 2023, the Consumer Trustee gazetted a new set of tender rules. Below are the letters which show the feedback which the AER and the Consumer Trustee exchanged on the revised tender rules.
AER letter to Consumer Trustee on updated tender rules - February 2023
Consumer Trustee letter to AER on updated tender rules - March 2023
Contact
For enquiries regarding the AER's regulatory functions for NSW Renewable Energy Zones please email AERinquiries
aer [dot] gov [dot] au (AERinquiries[at]aer[dot]gov[dot]au).