The AER has published the final updated Capital Expenditure Incentive Guidelines. These Guidelines outline our ex-ante and ex-post measures to incentivise efficient capital expenditure for networks.
Our updates 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 a separate targeted ex-post review for Integrated System Plan (ISP) projects and non-ISP projects;
exclusions from the application of the Capital Expenditure Sharing Scheme (CESS) in certain circumstances; and
adjustments to the CESS to accommodate abandoned ISP projects.
These amendments ensure the measures to incentivise efficient capital expenditure remain fit for purpose by enabling sufficient flexibility, without undermining the existing design and robustness of the schemes. This allows the AER to determine what level of analysis and examination is required on a case-by-case basis to respond to the unique circumstances of large individual projects.
Our final positions were informed by stakeholder feedback on our draft Guidelines. Further detail on how we considered stakeholder feedback in making the final Guidelines can be found in the accompanying explanatory note.