Today the Australian Energy Regulator (AER) has commenced a targeted review of the Revenue determination guideline for NSW non-contestable projects (Non-contestable Guideline) to incorporate the AEMC’s Improving the cost recovery arrangements for transmission non-network options Rule (ICRA Rule) under the Electricity Infrastructure Investment Act 2020 (NSW).
The review focuses on how we will incorporate the ICRA Rule into the NSW Electricity Infrastructure Investment (EII) framework. The proposed amendments will provide cost recovery certainty and timing flexibility for network operators that are seeking to include non-network option (NNO) components as part of their network infrastructure projects.
The proposed amendments include a new chapter within the Non-contestable Guideline to address determinations on NNO components. The chapter sets out how a network operator can prepare and submit applications to us for a determination on proposed cost recovery arrangements for the NNO components of a network infrastructure project. It also provides how we will assess those applications and factors we will consider in making a determination.
We encourage stakeholders to provide feedback on our proposed amendments.
Background
The ICRA Rule aims to improve how costs are recovered for transmission NNOs, by establishing new processes that allow transmission network service providers to adjust network support payment allowances during a regulatory period and to seek AER approval of network support payment methodologies that will inform how the AER will determine costs in the future.
Under clause 47A(3) of the Electricity Infrastructure Investment Regulation 2021 (NSW) we are required to, as far as is reasonably practicable, make our guidelines consistent with Chapter 6A of the NER. As a Regulator under the EII framework, we aim to ensure that the framework remains fit-for-purpose and aligned with reforms to the legislative framework. Consistent with these obligations, we commenced this targeted review following a request received in November 2025 from the NSW Department of Climate Change, Energy, the Environment and Water, that the Non-contestable Guideline be amended to incorporate the ICRA Rule.
Applying the ICRA Rule to the EII regulatory framework will support network operators, where appropriate, in their ability to commit to long-term NNOs. In turn it should help promote lower-cost solutions and improve outcomes for consumers.
Also published today is the AER's final Network alternative support payment guideline which gives effect to the ICRA Rule under the National Electricity Rules (NER) framework.
