AER publishes draft decision on revised cost thresholds for the regulatory investment tests

The Australian Energy Regulator (AER) has today published its draft determination on the 2021 cost thresholds review for the regulatory investment test for transmission (RIT-T) and the regulatory investment test for distribution (RIT-D) (collectively RITs).

The draft determination stipulates that if the estimated capital cost of a proposed investment by a transmission or distribution network business in its network:

• Exceeds $7 million, a RIT-T applies (currently $6 million)
• Exceeds $6 million, a RIT-D applies (no change proposed)
• Falls below $46 million, a RIT-T proponent can skip the 'project assessment draft report' consultation step (currently $43 million)
• Falls below $12 million, a RIT-D proponent can skip the 'draft project assessment report' consultation step (currently $11 million)
• Falls below $24 million, a RIT-D proponent can include its 'final project assessment report' as part of its 'distribution annual planning report' (currently $22 million)
• Exceeds $200,000, a network business can combine information in its annual planning report for assets it expects to retire or de-rate (no change proposed)
• Exceed $2 million, a distribution network business is required to include, in its distribution annual planning report, committed investments that address an urgent or unforeseen network issue. (no change proposed)

The National Electricity Rules (NER) require the AER to undertake a review every three years of the cost thresholds associated with the RITs to ascertain whether the cost thresholds need to be changed to reflect changes in input costs to maintain their appropriateness. The AER commenced its 2021 RIT cost thresholds review on 30 July 2021.

The RITs are cost-benefit tests that network businesses must undertake before building electricity network infrastructure. Network businesses are required to apply the RITs in instances where the capital costs of proposed transmission or distribution investments are above certain cost thresholds.

The AER is seeking submissions on the draft determination. Interested parties are invited to provide written submissions to the AER by close of business 15 October 2021. The AER must publish a final determination within 5 weeks of the close of submissions.

Submissions should be addressed to Stephanie Jolly (General Manager, AER Market Performance) at [email protected] with the following title: Submission for 2021 cost thresholds review for the regulatory investment tests.

Alternatively, stakeholders can mail submissions to:

Ms Stephanie Jolly
General Manager, Market Performance
Australian Energy Regulator
GPO Box 520
MELBOURNE VIC 3001

We prefer all submissions be publicly available to facilitate an informed and transparent consultation process. We will therefore treat submissions as public documents unless otherwise requested.

We request parties wishing to submit confidential information to:

• Clearly identify the information that is subject of the confidentiality claim; and
• Provide a non-confidential version of the submission, in addition to the confidential one.

We will place all non-confidential submissions on our website at www.aer.gov.au. For further information regarding our use and disclosure of information provided to us, see the ACCC/AER Information Policy.

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