The AER has published our proposed amendments to the Capital Expenditure Incentive Guidelines. These Guidelines outline our ex-ante and ex-post measures to incentivise efficient capital expenditure for networks.
The Capital Expenditure Sharing Scheme (CESS) provides ex-ante incentives for network service providers to undertake efficient capex during a regulatory control period. This is complemented by our ex-post review mechanism to ensure only efficient capex is rolled into the regulatory asset base. These measures mean that consumers pay only for efficient and prudent overspends and that consumers share in the benefits where a network service provider is able to spend less than its forecast capex.
The release of the proposed amendments to the Guidelines follows the completion of our first round of consultation on the matters outlined in our consultation paper. Information on how we considered stakeholder feedback in making the proposed amendments to the Guidelines can be found in the explanatory note accompanying the draft amendments.
Our amendments aim to address:
the Australian Energy Market Commission’s (AEMC) amending rule on managing ISP project uncertainty through targeted ex-post reviews, which requires us to update our Guidelines to enable us to carry out separate targeted ex-post review for Integrated System Plan (ISP) projects and non-ISP projects;
exclusions from the application of the CESS in certain circumstances; and
adjustments to the CESS to accommodate abandoned ISP projects.
Invitation for submissions
Interested stakeholders are invited to send submissions in response to our proposed amendments by 27 June 2025. Submissions or enquiries about the draft Guidelines should be sent to aerinquiry
aer [dot] gov [dot] au (aerinquiry[at]aer[dot]gov[dot]au). Alternative contact methods are available and are described in the accompanying explanatory statement.