The Australian Competition and Consumer Commission today issued two papers discussing the framework for transmission expansion in the National Electricity Market.
"The papers are directed at providing greater certainty for new investment while also improving the checks and balances on investments for the benefit of consumers", ACCC Commissioner, Mr John Martin, said today.
The first paper is a draft decision relating to the ACCC's current review of the regulatory test. The regulatory test is a cost-benefit test used by transmission and distribution businesses to assess the economic efficiency of network investments.
The draft decision discusses ways of including competition benefits in the cost-benefit analysis.
"Recognising benefits from increased competition between generators across states will facilitate investment in interconnectors", Mr Martin said. "The ACCC will be working with transmission businesses and other interested parties over the coming months to develop the principles of competition benefits. This work will be incorporated into the final decision".
The draft decision on the regulatory test also builds on the foundations of earlier work undertaken by the ACCC and takes into account the findings of the National Electricity Tribunal and Victorian Supreme Court in relation to the SNI regulatory test appeal.
The second paper, looking at new investment, forms part of the ACCC's Statement of Regulatory Principles. The Statement of Regulatory Principles sets out the manner in which the ACCC regulates electricity transmission businesses.
"At present businesses face the risk of optimisation for inefficient investment decision. The ACCC is concerned that this may prevent efficient investment decisions", Mr Martin said. "Therefore we are looking at ways to remove the investment uncertainty whilst at the same time improving incentives for the businesses to operate efficiently.
"The regulatory test is still likely to play a key role in transmission network investment decisions".
The ACCC invites interested parties to comment on both papers by April. It aims to finalise its review of the regulatory test in June. The capital expenditure framework form part of the ACCC's Statement of Regulatory Principles, of which a draft decision is expected to be issued in May.