AER publishes final determination on 2018 cost threshold review

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The AER has published its final determination on the 2018 cost thresholds review for the regulatory investment test for transmission (RIT-T) and the regulatory investment test for distribution (RIT-D) (collectively RITs).

This concludes the 2018 RIT cost thresholds review.

This cost thresholds review was conducted in accordance with clause 5.15.3 of the National Electricity Rules (NER).

The NER require the AER to undertake a review every three years of the cost thresholds associated with the RITs to ascertain whether these cost thresholds need to be changed to reflect changes in input costs to maintain their appropriateness.

On July 31, 2018 the AER commenced the 2018 RIT cost thresholds review.

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On September 11, 2018 the AER published a draft determination for the 2018 RIT cost thresholds review. The AER’s draft determination was that if the estimated capital cost of the investment option:

  • exceeds $6 million, a RIT-T applies
  • exceeds $6 million, a RIT-D applies
  • falls below $43 million, a RIT-T proponent can skip the ‘project assessment draft report’ consultation step
  • falls below $11 million, a RIT-D proponent can skip the ‘draft project assessment report’ consultation step
  • falls below $22 million, a RIT-D proponent can include its ‘final project assessment report’ as part of its ‘distribution annual planning report.

When reviewing the RIT cost thresholds, the AER also reviewed the cost thresholds under S5.8(g) and S5.8(b2)(4) of the rules, which concern how distribution businesses should report on committed investments and network assets in their distribution annual planning reports.

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The regulator sought submissions on the draft determination and two submissions were received which were supportive of the AER’s position in the draft determination.

Following consideration of the submissions received, the AER published a final determination upholding the decision of the draft determination.

Separately, the Energy Security Board (ESB) is coordinating the work of the Australian Energy Market Commission, the Australian Energy Regulator and the Australian Energy Market Operator on planning and regulation of the transmission system and interconnection. This review is not impacted by nor does it impact that coordination of work of the ESB.

Read the full review here.