Announcement date
27 October 2022
Link to announcement
https://www.aemc.gov.au/news-centre/media-releases/new-rule-increases-transparency-material-change-circumstances-provisions
Problem being addressed
This determination process responds to concerns with the implementation of the Regulatory Investment Test (RIT) process, which is a form of cost benefit analysis. The purpose of the RIT is to identify network investments that maximise the present value of net economic benefits in the market. Before investing in a significant transmission or distribution project to meet an identified need on the network, a proponent must consider all credible options (including potential non-network solutions) to meet that need, before selecting the option that maximises the net economic benefit across the market.
Under existing arrangements, the RIT must only be reapplied where, in the reasonable opinion of the project proponent, there has been a material change in circumstances. However, there are examples of where the RIT has not been triggered, despite significant increases in transmission costs.
Proposal
The Australian Energy Market Commission announced on 27 October 2022 that they have made a more preferable final rule that seeks to add clarity to the process for determining whether a material change in circumstances has occurred by requiring certain RIT proponents to develop reopening triggers which, if met, would require the RIT proponent to consider if and how to reconsider the extent to which the previously identified preferred option is likely to remain the most net beneficial option in light of the changed circumstances.
Assessed RIS outcome
Compliant decision RIS