The Australian Energy Market Commission (AEMC) has published a consultation paper on the Commonwealth Minister’s proposal to amend the NER to allow for the benefits of concessional financing to be shared with consumers. 

The issue of concessional finance was considered as part of the Commission’s Stage 3 Draft Report of the Transmission Planning Investment Review. The Minister’s proposal is in response to that report. 

The Concessional Finance rule change proposes to:

• Require TNSPs to inform the AER about the existence of a concessional financing arrangement.
• Require TNSPs to provide certain information to the AER about the value of the benefit that the TNSP and GFB have agreed should be passed onto consumers.
• Require the AER to seek and consider submissions from the GFB on whether it intended that some or all of the benefit of the concessional finance be passed through to consumers.
• Enable the AER to allow an agreed-upon quantum or proportion of benefit to pass to consumers and to enable the AER to treat the consumer benefits of the concessional finance as a capital contribution by adjusting the regulatory asset base (RAB) or through a revenue adjustment, determined through negotiation by the TNSP and GFB.

The concessional finance rule change request also outlines how concessional finance benefits can be shared with consumers in the Victorian Declared Shared Network for transmission assets procured through both contestable and non-contestable processes.

The Commission sought stakeholder feedback on the proposal. Written submissions responding to this consultation paper closed on 14 July 2023. 

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

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 Accommodating Financeability in the Regulatory Framework.

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 concessional finance for transmission network service providers 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 bilateral meetings with interested stakeholders and the public forum.

Background

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

The Minister’s rule change request is in the context of the Commonwealth Government’ Rewiring the Nation Fund, which commits $20 billion in concessional finance for the upgrade and expansion of Australia’s electricity grids. This finance is intended to facilitate lower costs and delivery of critical transmission infrastructure.

The rule change proposal considers how concessional financing provided by government funding bodies, such as the Clean Energy Finance Corporation (CEFC), to TNSPs should be treated in the NER when some benefits may be intended to be shared with consumers. As the NER does not explicitly recognise the treatment of concessional finance, additional guidance may be required to clarify the treatment of benefits from concessional finance. This view was shared by stakeholders who provided submissions to our TPIR Stage 3 Draft Report.

The Minister’s rule change request follows the work done by the Commission considering the regulatory treatment of concessional finance as part of the stage 3 draft report of the Transmission Planning Investment Review. 

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

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

Related rule change process

The Commission is separately considering a rule change request from the Minister on Accommodating Financeability in the Regulatory Framework.

That rule change request looks to address the risk that financeability challenges could arise in relation to actionable ISP projects.

For more information refer to: Accommodating financeability in the regulatory framework