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Potential new rule for electricity asset replacement

The AEMC has released a new draft rule proposing network businesses supply more information regarding retirement and replacement plans of electricity network assets.

As the technology-driven transformation of the electricity market continues, there is now a greater focus on managing the existing electricity network in new ways.

For example, developments in battery storage, demand response and other technologies may provide alternatives to ‘poles and wires’ when parts of the network need to be replaced.

Taking account of these changes, the draft rule extends some of the mechanisms and planning arrangements in the rules to provide better information and more transparency on upcoming network replacement projects.

Under the draft rule, transmission and distribution network businesses would be required to include information on plans to retire network assets or reduce their capability (known as ‘de-rating’) in their annual planning reports.

The draft rule also extends the application of regulatory investment tests (the RIT-T and RIT-D) to include replacement projects. These tests, which currently only apply to augmentation projects, require network businesses to weigh up the costs and benefits of potential network and non-network solutions.

Improving transparency should help providers of non-network solutions, such as battery storage, embedded generation and demand response, to identify investment opportunities in the network.

Increased transparency is also likely to assist the Australian Energy Regulator and stakeholders in regulatory decision-making processes such as revenue determinations.

The draft rule changes would make the planning process for replacement projects consistent with the process for planning network augmentation projects.

Stakeholders are invited to make submissions on the draft rule and draft rule determination by Tuesday 6 June 2017.

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