The Australian Energy Regulator (AER) has submitted a rule change request to the Australian Energy Market Commission (AEMC) proposing an amendment to the National Electricity Rules (NER) to enable a revised Service Target Performance Incentive Scheme (STPIS) to apply to a transmission network service provider (TNSP) before the end of a TNSP’s regulatory control period.
The AER has requested this rule change proposal be “fast tracked” under Division 3 of the National Electricity Law following consultation already undertaken with stakeholders on the nature of the problem as part of our review of the STPIS which was completed in April 2025.
The proposed amendments will provide us the flexibility to apply revisions to the STPIS in a timely manner, particularly in response to the changing circumstances that have arisen as a result of the energy transition. It will allow us to apply version 6 of the STPIS and subsequent versions of the STPIS to TNSPs as soon as possible, instead of having to wait until the commencement of each TNSP’s next regulatory control period. More broadly in light of the energy transition, if going forward, we do not have the ability to apply a revised STPIS that takes account changed circumstances until each TNSP’s next regulatory control period, this is not likely to be in the long-term interests of consumers.
Background
In April 2025, the AER published version 6 of the transmission STPIS following a review of version 5.
The review addressed stakeholder concerns that elements of the STPIS were no longer working as intended and that it was not providing the incentives consistent with the objectives of the STPIS. Largely, this is a consequence of the transition to renewable energy sources, which is changing the way electricity is generated and transported. The move from more centrally located thermal generation to more geographically dispersed and weather dependent fuel sources has created new demands on the transmission network with implications for how TNSPs manage their assets.
There is currently no ability under the NER to reopen a TNSP’s revenue determination during a regulatory control period for the purpose of allowing a new version of the STPIS to apply. This means the version of the STPIS in place at the time of a revenue determination will continue to apply until the start of each TNSP’s next regulatory control period.