Cost efficient electricity generation and transmission for the future
15 August 2012
Transmission Frameworks Review – Second Interim Report
The AEMC today called for comment on proposed arrangements to manage generation and transmission investment in the National Electricity Market.
The proposals were released by the AEMC's Transmission Frameworks Review which looks at ways to encourage cost-efficient investment into the future.
Under current arrangements customers pay the full cost of transmission network investment and generators make investment decisions which are not fully exposed to the cost of transmission in different locations.
AEMC Chairman, John Pierce, said the review’s Second Interim Report included choices for generators and transmission businesses to restructure their contractual relationship as well as proposals for significant strengthening of national transmission planning.
“Essentially our proposals are for a more market-oriented approach to providing transmission services - and to redirect some investment risk from customers to generators.
“We consider that the combined costs of generation and transmission should be taken into account when investment and operational decisions are made.
“Generators would be able to choose to pay for enhanced rights to the transmission network (which transports power sold by generators to consumers). This charge would reflect the long-term costs of providing transmission network services and reflect the different costs of providing access to the network in different locations,” Mr Pierce said.
The Second Interim Report suggests that the proposed regime for ‘optional firm financial access’ would give generators greater certainty of access to transmission, reducing their financial risks and contributing to lower operational costs over time.
It also outlines the Commission’s proposals to drive a higher level of inter-regional coordination by enhancing the function of the National Transmission Planner, a role currently performed by the Australian Energy Market Operator (AEMO).
Finally, it sets out proposals to improve the efficiency of connecting new load and generation to the transmission network. These aim to improve the ability of connecting parties to negotiate effectively with monopoly transmission providers by introducing mandatory cost and technical information disclosure in connection negotiations.
Submissions on the Second Interim Report are due by 10 October 2012.
The review’s final report will go the Standing Council on Energy and Resources in early 2013.
Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817