Actionable ISP Final Rule Recommendation

Publication date: Friday, 27th March 2020.

At the COAG Energy Council meeting on 20 March 2020, the Energy Security Board (ESB) presented a set of changes to the National Electricity Rules (Rules) to convert the Integrated System Plan (ISP) into action. Ministers agreed to these rule changes (the National Electricity Amendment (Integrated System Planning) 2020 – ISP Rules). The ISP Rules are intended to streamline the regulatory processes for key projects identified in the ISP whilst retaining a rigorous cost benefit assessment.

Under the ISP Rules, AEMO will conduct an extensive and transparent consultation process in order to publish an ISP at least every two years. The ISP modelling would be designed to meet a set of defined power system needs, and also public policies that meet specified criteria. When selecting the optimal development path for the power system, AEMO would adopt a methodology that manages risk and uncertainty in the long-term interests of customers.

In response to stakeholder feedback, the ESB has introduced two new checks and balances since the Consultation Draft ISP Rules:

  • an expert ISP consumer panel to advise AEMO during the development of the ISP and
  • an AER transparency review at key points in the ISP process.

The ISP will provide the overarching cost benefit analysis and risk assessment that specifies the identified need and one or more credible options to be considered in the Regulatory Investment Test for Transmission (RIT-T). The role of the RIT-T is to undertake a cost benefit analysis focussing on different technical solutions by looking in detail at engineering aspects, refining costs, considering alternate options, and staging. 

The ISP replaces the Project Specification Consultation Report (PSCR), identifying the need that the transmission network investment should meet, together with a recommended project (called an ISP candidate option) that should be considered by the RIT-T. TNSPs will be required to publish a Project Assessment Draft Report (PADR) by the date set out in the ISP (not less than 6 months after the publication of the final ISP), unless the AER approves a request for an extension.

An ISP project that has passed a RIT-T can commence a revised contingent project process that enables the AER to consider the revenue required for the ISP project.

The ISP Rules include the following key changes to the National Electricity Rules:

  • Converting the requirement for AEMO to prepare the National Transmission Network Development Plan (NTNDP) each year into a new regime for AEMO to prepare an ISP at least every two years including a draft stage allowing consultation.
  • Integrating the ISP with existing planning processes conducted under the NER by TNSPs, such as the production of Transmission Annual Planning Reports.
  • Changing the RIT-T rules for ISP projects to streamline the process to recognise the work that would already have been done for the ISP and avoid duplication of planning and modelling by the TNSPs.
  • Enabling actionable ISP projects that have passed the RIT-T to be able to commence a revised contingent project process.
  • Rules to deal with transitional issues, including recognition of the 2020 ISP as meeting the new rules and the application of the new rules to RIT-Ts currently underway.

Next Steps

The South Australian Energy Minister makes the rules by publishing them in the South Australian Government Gazette. The rules are scheduled to commence on 1 July 2020.

The AER is currently developing draft guidelines for consultation.

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