The AER has published a new version of the capital expenditure sharing scheme (CESS) that will apply in future electricity transmission and distribution determinations. This means that the first time this model will be issued will be for the 2024-29 round of distribution network service provider determinations.
Changes to our CESS model were required in order to implement the final decision on our Review of incentive schemes for network service providers.
The AER released its efficiency benefit sharing scheme, capital expenditure sharing scheme and capital expenditure incentive guideline as part of the Better Regulation reform program on 29 November 2013. The efficiency benefit sharing scheme, capital expenditure sharing scheme and capital expenditure incentive guideline outline measures that give electricity network businesses incentives to spend efficiently and share the benefits of efficiencies with consumers. These schemes and guidelines were consulted on as part of the better regulation reform program and all relevant documents and submissions are available on our expenditure incentives webpage.
Amendments
Incentive Scheme Review 2023
The AER undertook a review of incentive schemes which it completed in 2023. These guidelines incorporates revisions recommended by the review including:
- application of a lower sharing factor of 20 per cent to any underspend amount greater than 10 per cent of the approved forecast capital expenditure allowance
- new transparency measures which require NSPs to explain variations between capital expenditure forecasts and outcomes
- further guidance on application of the CESS to large transmission projects.
Amended National Energy Objectives
On May 2024, we published our final decision on making minor changes to five AER Guidelines to reflect the addition of the emissions reduction objective to the existing National Energy Objectives (NEO). We have now made these minor changes.
Capital Expenditure Guideline Review 2025
We are undertaking a consultative process for amending the Capital Expenditure Incentive Guideline, to take into account the Australian Energy Market Commission’s final rule for managing ISP project uncertainty through targeted ex-post reviews. In addition, this review also considers additional matters that has been raised by stakeholders since our 2023 review of incentive schemes for regulated networks.