More competition for transmission connections

The Australian Energy Market Commission (AEMC) has released a new rule that enables more competition in the provision of transmission connections, while maintaining clear accountability for the safety, security and reliability of the transmission network. The rule change request, submitted by the COAG Energy Council, was largely based on the connection and planning recommendations made by the AEMC in its Transmission Frameworks Review.

The rule comes into play as Australia transitions to a low-carbon economy, with an estimated 30 to 50 new large-scale generators (including wind and solar), as well as major energy users, set to connect to the transmission network by 2020. Increasing competition in building new transmission lines and substations that are needed to support these future connections could save over $100 million in the next three years, according to the AEMC, ultimately minimising the long-term costs of electricity for consumers.

“This reform can drive lower costs by increasing competition in the delivery of transmission connections but it should also avoid impacts on other customers who depend on the safe and reliable operation of the central grid,” said Energy Networks Australia CEO John Bradley.

“The decision increases contestability while ensuring the accountability for the reliability, safety and security of the shared network remains with the primary transmission network service provider in each jurisdiction.”

Transmission businesses will be required to provide more information in their annual planning reports, including more detail on forecast network constraints. Increased transparency is expected to help providers of non-network solutions, such as demand response, to focus on locations where they could defer or reduce the need to invest in the network.

Transmission businesses will also be required to consider investment options in another business’s region so options are not limited by geography or state boundaries. According to Bradley, transmission networks support arrangements to achieve greater consistency in connection and planning arrangements across the National Energy Market wherever possible.

The changes to the connection arrangements will not apply in Victoria, where the regulatory regime for transmission connections is overseen by the Australian Energy Market Operator and is outside the scope of the rule change request. However, the changes to the transmission planning arrangements will apply in Victoria.

The final rule is intended to provide more choice, control and certainty for any parties connecting to the transmission network, while at the same time making it clear that the incumbent transmission businesses are unambiguously accountable for providing a safe, reliable and secure transmission network — even if some parts of it are built and owned by other parties. The new planning requirements start this month, with new connection arrangements set to start on 1 July 2018.