Market Review: Completed

Overview

On 22 July 2008, the AEMC published its Final Report to the MCE on the National Transmission Planning Arrangements Review. The MCE has requested that the AEMC publicly make available the Final Report. The AEMC provided the Final Report to the MCE on 30 June 2008, as specified in the Review’s terms of reference. The Final Report provides the AEMC’s recommendations and supporting legal text, for a) establishing a National Transmission Planner as one of the functions of the proposed new Australian Energy Market Operator, b) a revised project assessment and consultation process for transmission investment to replace the current Regulatory Test and c) reforming the economic regulation for transmission network service providers to reflect the new arrangements.
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<p>On 22 July 2008, the AEMC published its Final Report to the MCE on the National Transmission Planning Arrangements Review. The MCE has requested that the AEMC publicly make available the Final Report. The AEMC provided the Final Report to the MCE on 30 June 2008, as specified in the Review&rsquo;s terms of reference. <br><br>The Final Report provides the AEMC&rsquo;s recommendations and supporting legal text, for a) establishing a National Transmission Planner as one of the functions of the proposed new Australian Energy Market Operator, b) a revised project assessment and consultation process for transmission investment to replace the current Regulatory Test and c) reforming the economic regulation for transmission network service providers to reflect the new arrangements.</p>
<h2>Background</h2>
<p>On 3 July 2007, the Ministerial Council on Energy (MCE) formally requested the Commission to develop a detailed implementation plan for the national transmission planning function, as specified in the Council of Australian Governments (COAG) decision of 13 April 2007. This includes changes to the transmission planning arrangements, regulatory arrangements and the current Regulatory Test. The AEMC has also been requested to undertake a review of transmission network reliability standards, with a view to developing a consistent national framework for network security and reliability. The Commission will be providing a reference to the Reliability Panel for the Panel to undertake the review of transmission network reliability standards.</p>
<p>On 17 August 2007, the AEMC published the Terms of Reference for the Reliability Panel review into electricity transmission network reliability standards requested by the MCE. View more information on the Transmission Reliability Standards Review.</p>
<p>On 26 September 2007, the Commission wrote to the MCE to advise them on possible changes to transmission pricing and network investment highlighting the framework for transmission charges between regions as a potential issue for consideration through the process of consultation on a National Transmission Planner. The Rules currently provide for inter-regional charges to be established through inter-governmental negotiation.</p>
<p><strong>Scope and purpose of review</strong></p>
<p>The MCE has directed the AEMC, under section 41 of the NEL, to:</p>
<ol>
<li class="listStyleAlpha">conduct a review into the development of a detailed implementation plan for the national electricity transmission planning function, including the most appropriate legislative amendments and Rule changes to implement COAG&rsquo;s response to the Energy Reform Implementation Group&rsquo;s (ERIG&rsquo;s) Electricity Transmission Planning and Regulation recommendations; and</li>
<li class="listStyleAlpha">conduct a review into electricity transmission network reliability standards, with a view to developing a consistent national framework for network security and reliability.</li>
</ol>
<p><strong>Timing for the review </strong></p>
<p>The MCE requires the AEMC to seek stakeholder responses and consultation in accordance with the following timetable:</p>
<table border="0">
<tbody>
<tr>
<td>Release Scoping Paper covering National Transmission Planning function and National Framework for Electricity Transmission Reliability Standards</td>
<td>by 31 July 2007</td>
</tr>
<tr>
<td>Release Issues Paper covering National Transmission Planning function</td>
<td>by 31 October 2007</td>
</tr>
<tr>
<td>Hold at least one public forum, following release of Issues Paper<br></td>
<td>TBA</td>
</tr>
<tr>
<td>Release Draft Report on National Transmission Planning function for public consideration</td>
<td>by 28 February 2008</td>
</tr>
<tr>
<td>Provide Final Report on National Transmission Planning function to MCE</td>
<td>by no later than 30 June 2008</td>
</tr>
<tr>
<td>Release Draft Report on National Framework for Electricity Transmission Reliability Standards for public consideration</td>
<td>by 31 July 2008</td>
</tr>
<tr>
<td>Provide Final Report on National Framework for Electricity Transmission Reliability Standards to MCE</td>
<td>by no later than 30 September 2008</td>
</tr>
</tbody>
</table>
<p><strong>The review</strong></p>
<p>Scoping Paper On 3 August 2007, the Commission published a Scoping Paper seeking comments from relevant stakeholders on the scope and content of the review including the issues they consider to be directly or indirectly relevant. Responses to the Scoping Paper will be of assistance in refining the approach to and focus of the review which will be clarified in a more targeted Issues Paper to be published for comment by 31 October 2007.</p>
<p><strong>Consultancy Reports</strong></p>
<p>On 26 October, the Commission released two consultancy reports as reference material for the National Transmission Planning Arrangements Review. The first report was prepared by the Brattle Group and is titled, &ldquo;International Review of Transmission Planning Arrangements&rdquo;. This study provides a factual description of transmission planning arrangements in international markets with similar characteristics to Australia.</p>
<p>The Second report was prepared by Firecone and is titled, &ldquo;The Evolution of Transmission Planning Arrangements in Australia&rdquo;. This report contains a detailed, factual description of the development of transmission planning arrangements for the NEM.</p>
<p>On 13 November 2007, ETNOF wrote a letter to the Commission raising a number of concerns in regard to the content of these two consultancy reports.</p>
<p><strong>Issues Paper</strong></p>
<p>On 9 November 2007 the AEMC published an Issues Paper on the development of a detailed implementation plan for a national transmission planning function. The Issues Paper focuses upon and discusses how the specific roles and functions of the National Planner ought to be defined as well as the appropriate content of a national transmission network development plan. It also discusses potential changes to the current Regulatory Test in light of national transmission planning arrangements. Submissions to the Issues paper were due by 21 December 2007.</p>
<p><strong>Public Forum and Discussion Paper</strong></p>
<p>On 2 April 2008, the Commission held a Public Forum in Melbourne to discuss draft policy positions on key aspects of the National Transmission Planner (NTP) Review. The Commission prepared a National Transmission Planner Discussion Paper to facilitate an informed discussion at the public forum, view the transcript of proceedings.</p>
<p>The Commission&rsquo;s Presentations at the Public Forum were:</p>
<ul>
<li>NTP Public Forum &ndash; Opening Address </li>
<li>NTP Public Forum &ndash; Role and Governance Presentation </li>
<li>NTP Public Forum &ndash; Regulatory Investment Test Presentation </li>
<li>NTP Public Forum &ndash; Revenue and Pricing Framework Presentation Grid Australia (formerly known as ETNOF-Electricity Transmission Network Owners Forum) and the NGF (the National Generators Forum) also made presentations</li>
<li>Grid Australia Presentations: Sessions 1 and 2 </li>
<li>NGF Presentation Session 1 </li>
<li>NGF Presentation Session 2 </li>
</ul>
<p>The public forum provided an important opportunity for interested stakeholders to engage in the consultation process before the publication of the Commission&rsquo;s Draft Report. The policy positions formalised in the Draft Report will be used to develop a detailed implementation plan for submission to the MCE. The Commission also released a consultancy report from the Brattle Group, on models of Inter-Regional Transmission Charging. This report describes the possible approaches to inter-regional charging arrangements, drawing from international experience and provides advice on how to address issues relating to the development of an inter-regional charging system.</p>
<p><strong>Final Report</strong></p>
<p>On 22 July 2008, the AEMC published its Final Report to the MCE on the National Transmission Planning Arrangements Review. The MCE has requested that the AEMC publicly make available the Final Report. The AEMC provided the Final Report to the MCE on 30 June 2008, as specified in the Review&rsquo;s terms of reference. The Final Report provides the AEMC&rsquo;s recommendations and supporting legal text, for a) establishing a National Transmission Planner as one of the functions of the proposed new Australian Energy Market Operator, b) a revised project assessment and consultation process for transmission investment to replace the current Regulatory Test and c) reforming the economic regulation for transmission network service providers to reflect the new arrangements.</p>

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Documentation

FINAL

AEMC documents