AEMC announces new competition rule

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A new rule released last week by the Australian Energy Market Commission (AEMC) can reduce costs for electricity customers over time by increasing competition in building transmission lines.

The AEMC Final Determination on Transmission Connection and Planning Arrangements introduces a new framework to provide more choice to customers and generators looking to connect to the transmission network.

The rule also places new obligations on transmission businesses to adopt a more consistent, transparent and coordinated approach when planning their networks.

“An estimated 30 to 50 new large scale generators, including wind and solar, as well as major energy users, will connect to the transmission network by 2020,” the commission said in a statement.

“Increasing competition in building new transmission lines and substations that are needed to support these future connections could save over $100 million in the next three years, ultimately minimising the long-term costs of electricity for consumers.

“The final rule provides more choice, control and certainty for any parties connecting to the transmission network, while at the same time making it clear that the incumbent transmission businesses are unambiguously accountable for providing a safe, reliable and secure transmission network – even if some parts of it are built and owned by other parties.”

Energy Networks Australia chief executive officer John Bradley said allowing transmission networks to compete for new infrastructure investment should result in lower prices for customers.

“This reform can drive lower costs by increasing competition in the delivery of transmission connections but it should also avoid impacts on other customers who depend on the safe and reliable operation of the central grid,” Mr Bradley said.

“It’s a reform to help enable the efficient connection of more renewable and low-emission generation technologies across the National Energy Market.

“The decision increases contestability while ensuring the accountability for the reliability, safety and security of the shared network remains with the primary Transmission Network Service Provider in each jurisdiction.”

The AEMC Report cites evidence of over 120 generators with public intentions to connect to the National Electricity Market and forecasts that 30 to 50 may connect by 2020.

The new rule also requires transmission businesses to include more detail in their annual planning reports, including more detail on forecast network constraints.

“Increased transparency should help providers of non-network solutions, such as demand response, to focus on locations where they could defer or reduce the need to invest in the network,” the AEMC said.

Mr Bradley said tansmission networks supported arrangements to achieve greater consistency in connection and planning arrangements across the National Energy Market wherever possible.

“We commend the AEMC for its work to engage with stakeholders prior to releasing the Final Determination,” Mr Bradley said.

The new planning requirements start this month, and new connection arrangements will start on 1 July 2018.

The changes to the connection arrangements will not apply in Victoria, where the regulatory regime for transmission connections is overseen by the Australian Energy Market Operator and is outside the scope of the rule change request.

However, the changes to the transmission planning arrangements will apply in Victoria.

The rule change request, submitted by the COAG Energy Council, was largely based on the connection and planning recommendations made by the AEMC in its Transmission Frameworks Review.