AEMC rule change on the economic regulation of network service providers

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 Cover letter to AEMC on AER rule change proposal - economic regulation of network service providers - 29 September 2011 ( PDF 852.1 KB )

AER Executive briefing - AEMC rule change proposal ( PDF 222.7 KB )

AER proposal to AEMC amendment to the National Electricity Rules - Parts A & B ( PDF 665.58 KB )

AER proposal to AEMC amendment of the National Electricity Rules - Part C ( PDF 609.8 KB )

AER proposal to AEMC amendment of the National Gas Rules ( PDF 181.1 KB )

Mr Stephen Lloyd SC advice on AER proposed amendments- AEMC proposed rule amendment ( PDF 167.8 KB )

Australian Government Solicitor advice on proposed amendments to the NER ( PDF 1.28 MB )

AER Rule change proposal- Complete Chapter 6 Draft Rules ( PDF 567.35 KB )

AER Rule change proposal- Complete Chapter 6A Draft Rules ( PDF 677.3 KB )

AER Rule change proposal- Complete Part 9 of the NGR ( PDF 178.88 KB )

AER Media release

AER Media release- Regulator proposes changes to price setting rules - 29 September 2011 ( PDF 50.18 KB )

Public forum

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 presentation - AEMC forum - 23 November 2011 ( PDF 411.17 KB )

Consultation paper

AER response to AEMC consultation paper - Economic regulation of NSPs - 12 December 2011 ( PDF 123.94 KB )

AER response to AEMC clarification questions

AER response to AEMC queries on AER network regulation rule change proposals - 2 February 2012 ( PDF 92.88 KB )

AER response to AEMC clarification questions - Attachment-1 ( XLS 3.06 MB )

AER response to AEMC clarification questions - Attachment-2 ( XLS 58.5 KB )

Directions paper

On 30 April 2012 we provided a submission to the AEMC's directions paper.

AER submission on AEMC directions paper - Economic regulation of NSPs - April 2012 ( PDF 979.41 KB )

On 2 May 2012 we provided a submission in relation to the AEMC revised draft rules Directions paper.

AER submission to AEMC Revised draft rules - economic regulation of the network service providers directions paper - 2 May 2012 ( PDF 481.81 KB )

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.

AER supplementary submission - How do the Rules constrain the AER? - 30 May 2012 ( PDF 130.61 KB )

Submission on further consultation on the cost of debt

AER response to the AEMC additional round of consultation on cost of debt issues - 10 July 2012 ( PDF 95.32 KB )

Draft determination

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.

Submission on AEMC Economic regulation of network service providers rule change (draft determination) - 5 October 2012 ( PDF 182.42 KB )

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.

Supplementary Submission on AEMC Economic regulation of network service providers rule change (draft determination) - 25 October 2012 ( PDF 70.09 KB )

AER submission to AEMC Consultation paper - Economic regulation of network service providers - Transitional arrangements - 25 October 2012 ( PDF 159.46 KB )

More information

More information on AEMC's economic regulation of network service providers rule change can be found on the AEMC website.