Rule Change: Open
The Australian Energy Market Commission (AEMC) has published its draft determination and draft rule to facilitate the sharing of concessional finance benefits with consumers.
Our draft 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 draft rule provides a transparent and predictable mechanism for this to occur.
We have made a more preferable draft rule
We have made a more preferable draft rule to that proposed in the rule change request submitted by the Hon Chris Bowen MP, Minister for Climate Change and Energy in March 2023. The key change is that we have extended the application of the rule to distribution network service providers.
Where a government funding body (GFB) and a network service provider (NSP) have agreed to share any of the benefits of concessional finance with consumers, our more preferable draft rule:
- Provides flexibility for the GFB and NSP to choose the mechanism through which the benefits will be shared with consumers (either through an adjustment to the NSPs regulatory asset base or its maximum allowable revenue, or a combination of both).
- Sets out the minimum information requirements that the NSP must provide the AER, to be contained in an agreement that is signed by both the GFB and the NSP.
- Requires the AER to pass on the benefits of the concessional finance to consumers in the manner agreed to by the GFB and NSP.
- Allows the AER to consult with the GFB and to seek further information from the NSP if the AER needs to clarify details of the agreement to share benefits.
- Clarifies how concessional finance benefits are to be treated in the economic assessment of project options during the development of the Integrated System Plan (ISP) and Regulatory Investment Tests.
- Accommodates the different arrangements for network planning and investment in Victoria to ensure concessional finance benefits can be shared with Victorian consumers.
A public forum will be held from 11am to 12 noon on 15 December 2023 to present the draft determination and to provide an opportunity for stakeholders to ask questions and provide their views.
Please note that the forum will be held jointly with the Accommodating Financeability in the Regulatory Framework. See below for more information on this project.
Please register for the forum here.
Submissions on our more preferable draft rule are due on 8 February 2024.
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.
There will be opportunities for you to engage with the AEMC throughout this process, such as one-on-one discussions and industry briefing sessions.
Related rule change process
We are separately considering a rule change request from the Minister and Energy Networks Australia on Accommodating Financeability in the Regulatory Framework.
That rule change request looks to address the risk that financeabiltiy challenges could arise in relation to actionable ISP projects. A draft determination and draft rule was published on 14 December 2023.
For more information, refer to the project page.