On 8 June 2023, the Australian Energy Market Commission (AEMC) published a consultation paper on the Commonwealth Minister’s (Minister) rule change request to accommodate financeability in the regulatory framework. 

On 9 June 2023, Energy Networks Australia (ENA) submitted a separate rule change request that seeks to ensure the financeability of actionable Integrated System Plan (ISP) projects.

On 6 July 2023, the Commission consolidated the two rule change requests proposed by the Minister and ENA, pursuant to section 93 of the National Electricity Law, as it considers it necessary or desirable to deal with the requests together. 

Stakeholder submissions on the consolidated rule change request, including on both our consultation paper and ENA’s rule change request, were due by 3 August 2023.

The Minister’s financeability rule change request

On 11 April 2023 the AEMC received a rule change request from The Honourable Chris Bowen MP Minister for Climate Change and Energy to amend the National Electricity Rules (NER).

The Minister considers that there is a foreseeable risk that financeability challenges could arise for actionable ISP projects, which may impact the timely and efficient delivery of these major transmission projects. This is because:

• TNSPs may face challenges in raising capital to proceed with ISP projects
• the existing revenue framework is not sufficiently flexible to address financeability challenges that may arise in the future.

To address the risk faced by TNSPs, the Minister submitted a rule change request that seeks to:

• introduce greater flexibility in the revenue-setting framework in the NER to vary the depreciation profile of assets that form part of an actionable ISP project. This reflects the Commission’s recommended solution from the Stage 2 final report of the Transmission Planning and Investment Review (TPIR).
• allow TNSPs to recover depreciation of biodiversity offset costs on an as incurred basis. We did not raise this solution in TPIR. Clarify the treatment of depreciation for asset classes, including biodiversity offsets. We did not raise this solution in TPIR.

ENA’s financeability rule change request

On 9 June 2023, ENA submitted a separate rule change request that seeks to ensure the financeability of actionable ISP projects. ENA propose that the NER specify a financeability formula that the AER must use to assess whether a TNSP can finance a specific ISP project.

On 30 June 2023, ENA submitted a letter to the Commission noting a correction to ENA’s rule change request in relation to Figure 2 on p. 31. The Commission will consider the new version of Figure 2 as part of ENA’s rule change request. 

Consolidation of rule change requests and time extension for submissions to consultation paper

On 6 July 2023, the Commission initiated ENA’s rule change request from the ENA and consolidated it with the Minister’s rule change request under the name “Accommodating financeability in the regulatory framework” (ERC0348). 

The Commission decided to consolidate the rule change requests as it considers it necessary or desirable to deal with the requests together. Both rule changes relate to the financeability of actionable ISP projects.

The Commission has extended the time to publish the draft rule determination until 16 November 2023

The Commission has extended the period of time for making a draft rule determination on the Accommodating financeability in the regulatory framework rule change request under section 107 of the National Electricity Law.

The draft rule determination will now be published by 16 November 2023. 

The extension is due to the complexity of the rule change request and further time is required to finalise the draft rule determination.

The Commission has been engaging with a range of stakeholders over the past few months on the proposal, including through meetings with interested stakeholders and the public forum. 

The AEMC held a virtual public forum on Monday, 26 June 2023

The Commission held a public forum on the consultation paper, which set out the proposed rule change request and the rule change process. Stakeholders had the opportunity to provide their views on the questions detailed in the paper and to ask questions. 

The forum took place virtually on Monday, 26 June 2023 at 11 am and also covered the related rule change process on Concessional Finance for Transmission Network Service Providers. View the forum slides here.

We are seeking your views on financeability issues for actionable ISP projects

There will be opportunities for you to engage with the AEMC throughout this process, through the provision of submissions, one-on-one discussions or industry briefing sessions.

A copy of the rule change requests are available below along with the consultation paper and information sheet.   

Related rule change process on Concessional finance

The Commission is separately considering a rule change request from the Minister on Concessional finance for Transmission Network Service Providers. 

That rule change request relates to amending the NER to enable the AER to take into account how any financial benefits that may arise from concessional financing of transmission infrastructure are shared between consumers and TNSPs.
 

For more information refer to: Concessional Finance for Transmission Network Service Providers