Regulatory framework

The purpose of this guideline is to give effect to the AER’s regulatory functions under the EII Act and Regulations. It sets out the process and method for how the AER intends to make a contribution determination, along with the roles and responsibilities of each scheme entity. 

This guideline details:

• instructions to assist owners of source data 
• expectations for provision of supporting material, auditing, quality assurance and an approach to confidentiality
• details of how the contribution determination template and supporting information is compiled and submitted by the scheme financial vehicle.

This policy paper provides an overview of the regulatory framework within which the Regulator will undertake the Transmission Efficiency Test (TET) and make revenue determinations for network infrastructure projects under the EII Act.

It includes a summary of the provisions of the EII Act relevant to the Regulator’s functions under Part 5 of the EII Act as well as the policy intent that will inform regulations and the Regulator’s Guidelines.

This policy paper aims to assist stakeholders to better understand why the AER’s draft Guidelines on the TET and revenue determination for contestable projects cover what they do and how they fit into the broader regulatory framework. It will also enable stakeholders to provide more informed submissions to the Regulator on the draft Guidelines.

The Network Authorisation Guidelines provide information to stakeholders about how EnergyCo (in its role as an Infrastructure Planner) and AEMO Services Limited (in its role as the Consumer Trustee) intend to undertake their functions relating to REZ network infrastructure projects.

The Network Authorisation Guidelines cover:

• Recommending REZ network infrastructure projects: The process the Infrastructure Planner may undertake in developing recommendations to the Consumer Trustee about REZ network infrastructure projects under section 30 of the EII Act
• Authorising or directing REZ network infrastructure projects: The process the Consumer Trustee may undertake in considering and responding to recommendations from the Infrastructure Planner under section 31 of the EII Act.
  
  This includes either authorising a Network Operator to carry out a REZ network infrastructure project or recommending the Minister direct a Network Operator to carry out a REZ network infrastructure project
• Engaging and consulting with stakeholders: How the Infrastructure Planner and Consumer Trustee may independently engage and consult with stakeholders in performing their respective functions under sections 30 and 31 of the EII Act
• Collaboration between the Infrastructure Planner and the Consumer Trustee: How the entities intend to collaborate with each other, while maintaining their independence, in performing these functions

The Network Authorisation Guidelines have been developed in two parts by EnergyCo and the AEMO Services Limited, and these are presented as a single document for convenience.

The Network Authorisation Guidelines are open for public consultation until 1 June. To make a submission, please email [email protected].

The AER, as the Regulator for Part 5 of the EII Act, will make revenue determinations for Network Operators authorised or directed to carry out network infrastructure projects under the EII Act. The EII Act allows Network Operators to be selected either under a contestable process or a non-contestable process. The TET and Revenue Determination guidelines for contestably procured Network Operators set out how the Australian Energy Regulator intends to undertake its regulatory role for Network Operators selected via a contestable process. 

It sets out the AER’s approach to: 

• assessing the Infrastructure Planner’s procurement strategy and procurement process. This includes the process the AER will undertake in reviewing the Infrastructure Planner’s procurement strategy prior to conducting a contestable network operator procurement process. This is to assess whether the AER is satisfied the procurement strategy is likely to result in submissions that represent prudent, efficient and reasonable costs for carrying out the network infrastructure project in accordance with the EII Act 
• making a revenue determination for Network Operators based on the outcomes of the competitive procurement process. This includes the revenue determination process the AER intends to undertake (including what a revenue proposal must contain, the timeline to make a determination and the contents of a determination). It also sets out the AER’s intended approach to assessing a revenue proposal, including application of the Transmission Efficiency Test. 

A separate guideline will be developed on the Australian Energy Regulator’s role in respect of Network Operators selected via a non-contestable process.

The OECC consulted on the tranche 2 regulations to support the Electricity Infrastructure Roadmap Issues Paper throughout May 2021. The tranche 2 process related to urgent and mechanical regulations needed to support the NSW Jobs Advocate, the Energy Security Target and the Electricity Infrastructure Investment Safeguard.

Thank you to those who engaged in this process, we received 34 submissions to the paper. Non-confidential submissions are available to view here. You can also view a recording of the online session held on 11 May 2021 or the OECC’s presentation from this session.

Regulations relevant to this process are now made under the Electricity Infrastructure Investment Regulation 2021.

The OECC consulted on the Network Infrastructure Projects (Part 5 of the EII Act) Policy Paper through October – November 2021. The paper relates to how Renewable Energy Zone network infrastructure projects are proposed to be assessed, selected and to earn a regulated return, and how the Transmission Efficiency Test will be applied by the Regulator prior to the revenue determination.

Thank you to those who engaged in this process. We received 32 submissions and over 100 registrations to the interactive online session, held on 4 November 2021. Non-confidential submissions are available to view here. You can also view a recording of the online session or the department’s presentation.

The OECC has published a policy paper for the Regulatory framework for the Transmission Efficiency Test and Regulator’s determinations for network infrastructure projects, in conjunction with the AER publishing the Draft TET and Revenue Determination Guidelines for contestably procured Network Operators.

The OECC consulted on the Infrastructure Safeguard (Part 6 of the EII Act) Policy Paper throughout September - October 2021. The Electricity Infrastructure Safeguard is the primary mechanism to encourage investment in generation, long duration storage and firming under the Roadmap. The Consumer Trustee will publish an Infrastructure Investment Objectives Report and tender for Long-Term Energy Service Agreements. This paper seeks feedback on regulations needed to support the Infrastructure Safeguard so that it is well integrated with national frameworks, flexible to market conditions, yet robust and with appropriate oversight. 

Thank you to those who engaged in this process. We received 27 submissions and over 120 registrations to the interactive online session, held on 13 October 2021. Non-confidential submissions are available to view here. You can also view a recording of the online session or the OECC’s presentation.

Regulations for the Risk Management Framework that supports the Infrastructure Safeguard we made in April 2022.

The OECC consulted on the Electricity Infrastructure Fund (Part 7 of the EII Act) Policy Paper throughout September – October 2021. The policy paper considers regulations to support the Electricity Infrastructure Fund and how it will be administered by the Scheme Financial Vehicle. The purpose of the Fund is to manage costs associated with network investment required to support infrastructure projects under the EII Act, the establishment of Long-Term Energy Service Agreements, and administration of the EII Act by its five appointed entities.

Thank you to those who engaged in this process. We received 20 submissions and over 135 registrations to the interactive online session, held on 14 October 2021. Non-confidential submissions are available to view here. You can also view a recording of the online session or the department’s presentation.

Regulations relating to the contribution determination process were made in April 2022.