The Commission has made a more preferable final rule (final rule) to enable the benefits of concessional finance provided to transmission and distribution network service providers (NSPs) to be shared with consumers in the form of lower network tariffs.

Our final rule is made in the context of the significant energy transformation underway in the National Electricity Market (NEM) and the Commonwealth Government’s intent to facilitate lower costs and faster delivery of critical transmission infrastructure by providing low-cost financing. The Commonwealth has committed $20 billion through the Rewiring the Nation Fund for this purpose.  

Amendments to the National Electricity Rules (NER) are needed so that the benefits of low-cost financing provided by governments can be shared with consumers where there is an intent to do so. Our final rule provides a transparent and predictable mechanism for this to occur. It allows the network service provider (NSP) and government funding body (GFB) to agree to:

• pass through an agreed amount to transmission or distribution network users over an agreed period, or
• reduce the value of specified assets in the Regulated Asset Base, or
• a combination of both.  

Our final rule is in the long-term interests of consumers

The final rule:

• Improves outcomes for consumers by delivering benefits to consumers in the form of lower costs from the provision of concessional finance.
• Provides for a simple and transparent mechanism that will provide NSPs, GFBs and other parties with certainty about what information the AER requires to facilitate the sharing of concessional finance benefits with consumers.  
• Supports emissions reduction and the shift to net zero by enabling the provision of concessional finance and the sharing of benefits with consumers to be facilitated promptly to support key infrastructure.
• Supports efficient market arrangements by appropriately allocating the risk on the GFBs and NSPs to agree on the benefits of concessional finance to be shared with consumers  
• Provides certainty to the AER through the disclosure of a documented agreement, which forms the basis upon which the AER facilitates the benefits to be shared with consumers.

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 NER.  

The rule change proposal considers how concessional financing provided to NSPs by government funding bodies, such as the Clean Energy Finance Corporation, should be treated under the NER when there is an intent to share any benefits of the financing with consumers. As the NER does not explicitly recognise the treatment of concessional finance, additional guidance is required to clarify the treatment of the benefits from concessional finance.  

This issue was highlighted in the AEMC’s work under the Transmission Planning and Investment Review, and stakeholders provided submissions on this matter in response to our Stage 3 Draft Report.  

Related rule change process

On 21 March 2024, the Commission published final rule determinations for this rule change on Sharing concessional finance benefits with consumers (ERC0349) and a separate rule change on Accommodating financeability in the regulatory framework (ERC0348). These rule changes cover different elements relating to the treatment of concessional finance, that has been provided by GFBs to NSPs, to support investment in network infrastructure.

For more information, refer to the project page.