Rule Change: Open

Overview

This rule change request from Energy Networks Australia would require the Australian Energy Regulator to develop a demand management incentive scheme (DMIS) and demand management innovation allowance (DMIA) to apply to transmission network service providers.
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This rule change request from Energy Networks Australia would require the Australian Energy Regulator to develop a demand management incentive scheme (DMIS) and demand management innovation allowance (DMIA) to apply to transmission network service providers.

The DMIS and DMIA schemes provide for incentive payments to network businesses to undertake efficient expenditure on non-network options, and funding for research and development on demand management projects respectively. Both schemes currently apply to distribution networks. 

Draft determination

On 12 September 2019 the AEMC published a draft determination and a more preferable draft rule to apply the innovation allowance to transmission networks. Introducing a DMIA for transmission is expected to encourage transmission businesses to expand and share their knowledge and understanding of innovative demand management projects that may reduce long term network costs and, consequently, could lower prices for consumers.

However, the Commission is not satisfied that the benefits of applying the DMIS to transmission businesses would outweigh the upfront costs to consumers. For example, if the DMIS is implemented, transmission businesses would receive incentive payments for undertaking non-network options they would already have been required to adopt under the regulatory investment test for transmission (RIT-T).

The Commission invites submissions on the draft rule determination, including the more preferable draft rule, by 24 October 2019. 

Following consideration of submissions, the Commission intends to publish its final determination by 5 December 2019.

Consultation paper

On 23 May 2019 the AEMC published a consultation paper on the rule change request. 11 submissions were received and can be found below.

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Documentation