Type
Communications
Sector
Electricity
Segment
Transmission
Issue date
Contacts
General inquiries - Cost Pass Throughs

The Australian Energy Regulator (AER) has published a draft Network alternative support payment guideline for consultation. This is a new Guideline required by the Improving the cost recovery arrangements for transmission non-network options Rule which commenced on 13 March 2025.

The Rule amends the cost recovery framework to improve arrangements for transmission network service providers (TNSPs) implementing non-network options (NNOs). TNSPs may seek to enter into arrangements with NNO providers as an alternative to typical ‘poles and wires’ network investment to meet network needs. For example, a NNO could be to contract for energy storage services to support the capacity of the grid in a particular location.

Our new draft Guideline sets out how we will generally determine applications from TNSPs to:

  • adjust network support payment allowances to account for new or amended transmission NNOs
  • approve a methodology for how NNO costs are expected to be incurred or adjusted over the life of an agreement between a TNSP and a NNO provider.

The Guideline assists TNSPs to better understand how they can apply for AER determinations on adjustments to their network support payment allowances, or draft payment methodologies for NNO services. The Guideline provides guidance on the nature of the determination, the criteria, process, and the type of information we may have regard to in making a determination.

 

 

We prefer to make submissions publicly available to facilitate an informed and transparent consultative process. We will treat written submissions as public documents unless otherwise requested.     

Stakeholders should email any comments or written submissions to costpassthroughsataer [dot] gov [dot] au (costpassthroughs[at]aer[dot]gov[dot]au) by close of business on Friday, 30 January 2026.

The AER will consider stakeholder feedback in developing the final Guideline, which must be published by 13 March 2026.

 

Background

The Improving the cost recovery arrangements for transmission non-network options Rule allows:

  • TNSPs to apply to the AER to adjust network support payment allowances for the remaining years of a regulatory control period to incorporate new or changed expenditure for a proposed NNO service
  • TNSPs to seek a determination from the AER that a methodology for such payments will be consistent with the operating expenditure objectives, criteria and factors.

The Rule requires the AER to publish a Network alternative support payment guideline which sets out the eligibility criteria and thresholds TNSPs must meet to submit applications for determinations on NNO payment methodologies and adjustments to network support payment allowances.