We are seeking your feedback on a rule change request from Dr Kerry Schott AO, Chair of the Energy Security Board, that seeks to remove barriers so that network businesses can speed up their investments in time critical projects.
The consultation paper released today outlines a proposal to provide earlier answers to network businesses which need to know if the costs of contingent projects will be recovered.
The proposal may also allow time critical projects to progress more quickly – particularly those which have been identified as priority projects in the Australian Energy Market Operator’s Integrated System Plan.
Contingent projects are major network infrastructure assets which have been pencilled in to long-term investment plans. Contingent projects are flagged in network revenue proposals and approved by the Australian Energy Regulator (AER) in revenue determinations. When a network business has met the requirements to request cost recovery from consumers for one of these projects, it submits a contingent project application to the AER. Currently, network businesses cannot submit a contingent project application for approval in the last 90 business days of a regulatory year.
The rule request seeks to remove this restriction so network businesses can submit a contingent project application any time, except during the last 90 business days of a regulatory control period, which is usually five years.
Contingent project applications would continue to be prevented from being submitted in the last 90 business days before the end of a regulatory control period because there are no remaining years of the regulatory control period in which revenue can be adjusted.
The proposed changes would not affect whether and when a network business could recover costs from consumers for a contingent project. They would bring the AER consideration and approval of a contingent project forward three to four months if it is submitted in the last 90 business days of a regulatory year.
If an application is submitted during the final 90 business days of a regulatory year and approved by the AER, businesses could not start to recover costs from consumers until the second regulatory year that commences after the application is submitted. It therefore does not change when the costs associated with contingent projects would be recovered from consumers.
At the COAG Energy Council meeting on 19 December 2018, Ministers discussed and agreed on an approach to deliver the priority transmission projects identified in the Australian Energy Market Operator’s Integrated System Plan as soon as possible, including rule changes to streamline regulatory processes.
As the AEMC considers this to be a non-controversial rule change proposal, we are proceeding under an expedited process, with a final rule due by May 2019.
Subject to any objections to the expedited process, there will only be one round of consultation. Objections to the use of the expedited process must be lodged by 21 March 2019.
Submissions on the consultation paper are due by 4 April 2019.
Media: Prudence Anderson, Communication Director, 02 8296 7817; 0404 821 935