Price Determinations – Electricity transmission in the NEM

Access Arrangements & Price Determinations

Aug 20
Price Determinations – Electricity transmission in the NEM

The AER is undertaking price determinations for the following electricity transmission network service providers (TNSPs).

Ausnet (2017-2022) – TNSP for Victoria

  • AusNet Services has raised two issues in the proposed Framework and Approach (F&A) process:
    • the length of the regulatory control period (AusNet proposes that the period should be longer than 5 years); and
    • the application of the ex-post review of capital expenditure to the current regulatory control period (AusNet propose this review be deferred).
  • The AER published the final positions F&A paper in Apr 2015.
  • Approx. timetable:
    • Regulatory proposal to be submitted 31 Oct 2015, followed by a draft decision on 30 Jun 2016 and a final decision on 31 Jan 2017.

Powerlink (2017-2022) – TNSP for Queensland.

  • Powerlink has proposed to the AER that it be permitted to apply a ‘top-down’ approach to expenditure forecasting for its capital projects later in the next regulatory control period, supported by a sample of projects also forecast using the conventional ‘bottom-up’ build approach to forecasting.  The AER is considering whether this proposal should be allowed.
  • The AER published the final F&A paper on 22 Jun 2015.
  • Approx. timetable:
    • Regulatory proposal to be submitted 31 Jan 2016, with a draft decision following on 30 Sep 2016 and a final decision on 30 Apr 2017.

Directlink (2015-2020) – Interconnector between NSW and QLD.

  • On 13 Jan 2015, Directlink submitted its revised proposal.
  • On 30 Apr 2015, the AER published its final decision.
    • Most of the (12.5%) reduction between final allowable revenue and Directlink’s revised proposal was due to a lower (nominal post tax) WACC (5.45% compared to 6.10% proposed by the service provider).  The AER attributed the lower WACC to an improving investment environment.

Transend (2015-2019) – TNSP for TAS.

  • Revised proposal submitted 6 Jan 2015.
  • 30 Apr – the AER published its final decision, accepting Transend’s forecast allowable revenue of $693.9m over the regulatory period.

TransGrid (2014-2019) – TNSP for NSW.

  • On 13 Jan, TransGrid submitted its revised proposal.
  • Final decision published 30 Apr 2015, TransGrid can recover $3036m over the regulatory period, a reduction of 20% from the revised proposal.

Background:

The first step in developing the revenue allowance for the next regulatory control period is for the AER to develop  Framework & Approach (F&A) papers. These set out which incentive schemes are to apply to the TSNPs and the AER’s approach to expenditure forecasting and depreciation for the next regulatory control period, which will commence in 2017.