Draft rule to provide flexibility for interconnector projects


The draft rule allows jurisdictions to agree on the cost allocation for new regulated interconnectors and provides a pathway for an interconnector cost allocation agreement to be implemented.  The draft rule follows a rule change request submitted by the Commonwealth, Tasmanian, and Victorian Energy Ministers.

Australian Energy Market Commission (AEMC) Chair Anna Collyer says this draft rule is a critical step in addressing potential barriers to progressing interconnector projects.

‘’Disproportionate electricity bill impacts in one jurisdiction over another could potentially threaten the support of that jurisdiction for the development of the interconnector,’’ she said.

Under the draft rule, two or more Ministers will be able to make an agreement, which must satisfy a set of minimum criteria. The draft rule sets out the roles of governments, the Australian Energy Regulator, and Transmission Network Service Providers, providing clarity for those stakeholders.

The Commission recognises the importance of transparency, and the draft rule requires agreements to be published. The draft determination also recommends that governments communicate the benefits of any agreement to consumers in a timely way.

Collyer added, ‘’transparency is key to ensuring that consumers understand the benefits of these agreements and how they will contribute to a more sustainable and reliable energy future.”

The current cost allocation framework will continue to apply in the absence of an agreement. Other aspects of the regulatory framework, such as the regulatory investment test and the AER’s revenue setting arrangements, would also remain unchanged.

The AEMC considers that removing barriers to the efficient delivery of net beneficial transmission infrastructure is in the long-term interests of consumers.

‘’There is broad consensus that transmission is a critical enabler of the transition to net zero, both in the National Electricity Market (NEM) and the economy more broadly,” Collyer said.

”This transition will require an unprecedented level of investment in, and build of, transmission infrastructure to deliver power from renewable generation and energy storage to consumers.”

The AEMC is seeking stakeholder feedback on the draft determination and rule. Written submissions on the draft determination can be made until Thursday 1 August 2024.