The Energy Security Board proposed a change to the National Electricity Rules which would no longer prevent transmission and distribution network businesses from submitting a contingent project application to the Australian Energy Regulator (AER) in the 90 business days before the end of a regulatory year, except where that regulatory year is the last year of a regulatory control period.
The contingent project mechanism can be used where large discrete projects have already been identified as part of the revenue determination process but it is uncertain whether it will be required during the upcoming regulatory period.
PIAC supports the rule change proposal to the extent that it:
- Helps the timely delivery of investments by providing revenue recovery certainty to networks for their contingent projects; and
- Does not compromise the ability of the AER to robustly and accurately assess the appropriate revenue adjustment to be made.
This is important as the National Energy Market faces, at times, competing pressures of needing investments to transition to a low or zero-emission generation fleet while also not exacerbating the current affordability issues facing many consumers.