AER decision to provide more cost reflective and flexible transmission pricing arrangements

The Australian Energy Regulator has made a final decision to approve the revised pricing methodology that the Australian Energy Market Operator (AEMO) proposed for its 2014-19 regulatory control period.

This decision requires AEMO to use the most recent historical data on its customer’s network usage to set the prices and charges for transmission services in Victoria, and in exceptional circumstances provides the added flexibility for actual data to be used.

The pricing arrangements AEMO administers can have a significant impact on large industrial customers in Victoria. Written submissions from stakeholders were considered and multiple public forums were staged.

“The use of the latest network data available means that the charges AEMO’s customers pay will be more cost reflective,” AER Chairman Andrew Reeves said.

“This will benefit all electricity consumers in the long run by sending investment and consumption signals that will encourage the most effective and efficient use of networks’ infrastructure.”

“The added flexibility to use actual data in exceptional circumstances recognises the trend of declining energy consumption in Victoria and that some customer’s network usage is likely to change as a result of the decommissioning of large or highly variable loads,” Mr Reeves said.

The AER is required to make a transmission determination for AEMO in its role as a provider of transmission services in Victoria for its next regulatory control period commencing 1 July 2014 to 30 June 2019. Our transmission determination consists of a pricing methodology, negotiating framework and negotiated transmission service criteria.

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Issued date: 
1 April 2014
AER reference: 
NR 007/14