On 29 September 2011, the AER submitted two rule change requests to the Australian Energy Market Commission (AEMC) related to the amendment of the energy network provisions of the National Electricity Rules and National Gas Rules.
The AER is currently restricted in its ability to set prices based on an objective assessment of the efficiency or the necessity of the expenditure proposed by electricity businesses. The AER’s proposed changes would give it the scope to make a more effective and robust assessment of the costs proposed by electricity network businesses.
The AER is also proposing a consistent approach for setting the rate of return on investment for gas and electricity network businesses. Under this approach the AER would review the rate of return at least every five years with the outcome applying to each subsequent energy network revenue determination.
Also proposed are improvements to the processes for stakeholders to provide their views on spending proposals from electricity network businesses.
The AER has submitted its proposals to the AEMC for consideration. To make the changes, the AEMC needs to be sure that the proposed changes meet the National Electricity Objective. The AER is confident that the proposed changes will maintain incentives for efficient investment and operations of the networks and advance the long term interests of consumers.
The AER intends that the rules changes would be in place in time for the next round of revenue determinations in NSW and the ACT, with the first determinations under the new rules to take effect from 1 July 2014.
AER rule change proposal to AEMC
AER Media release
The AEMC held a public forum in Brisbane on 23 November 2011 to facilitate discussion on the rule change requests. The AER Chairman presented at the forum.
AER response to AEMC clarification questions
On 30 April 2012 we provided a submission to the AEMC's directions paper.
On 2 May 2012 we provided a submission in relation to the AEMC revised draft rules Directions paper.
On 30 May 2012 we provided a supplementary submission explaining National Electricity Rules (rules) constrain the AER’s ability to determine an estimate of efficient costs.
Submission on further consultation on the cost of debt
On 5 October 2012 we provided a submission on the AEMC’s draft rule determination. The submission highlighted that the AEMC’s draft rules represent a significant improvement to the rules and address the major issues highlighted in our rule change proposal.
On 25 October 2012 we provided a supplementary submission, commenting on the legal drafting of the proposed rule. as well as responded to the proposed transitional arrangements.