Market Review: Open

Overview

The Australian Energy Market Commission is undertaking its annual analysis to determine whether there is a need to exercise the last resort planning power (LRPP). This power allows the AEMC to direct a network business to undertake a regulatory investment test to weigh up the costs and benefits of projects to address congestion on the transmission network. 

Request for supplementary information

The AEMC has used AEMO’s 2016 National Transmission Network Development Plans, its 2018 Integrated System Plan and the 2018 transmission annual planning reports to assess transmission inter-regional constraints in the national electricity market, and the projects that are planned or underway to address these constraints. This information shows that in most cases transmission network service providers (TNSPs) have adequately addressed the inter-regional constraints identified by AEMO. 

However, there was insufficient information publicly available for the AEMC to determine whether TNSPs are taking appropriate steps to address the expected inter-regional constraints identified by AEMO in relation to the Queensland – New South Wales interconnector. 

As a result, on 21 November 2018 the AEMC requested:

  • confirmation from AEMO, in its role as national transmission planner, of the inter-regional transmission constraints which it believes need to be addressed by the relevant TNSPs
  • details from TransGrid of how it intends to address the inter-regional constraints on the Queensland - NSW interconnector, as well as the timing for the processes to address those constraints.

Copies of the AEMC’s letters to AEMO and TransGrid can be found below.

Next steps

TransGrid provided a letter of reply on 23 November 2018 and AEMO provided a letter of reply on 27 November 2018. Copies of these responses are below. The AEMC will use the additional information in these responses as part of its assessment of whether to exercise the last resort planning power. The AEMC will publish its decision in early 2019.


Background

The last resort planning power is an oversight mechanism conferred on the Commission in the National Electricity Rules to complement the planning roles of transmission businesses and AEMO. It allows the AEMC to require one or more network service providers to apply the regulatory investment test for transmission (RIT-T) to augmentation projects that are likely to relieve a forecast constraint on a national transmission flow path.

The purpose of the LRPP is to ensure timely and efficient inter-regional transmission investment in the national electricity market for the long-term interests of consumers. It can be exercised by directing one or more network service providers (typically a TNSP) to apply the RIT-T when other investment planning mechanisms are not addressing identified inter-regional constraints.

Documentation