The Australian Energy Market Commission (AEMC) have released a new rule to allow more competition in the provision of transmission connections, which will reduce costs for electricity customers over time.
The AEMC Final Determination on Transmission Connection and Planning Arrangements introduces a new framework to provide more choice to customers and generators looking to connect to the transmission network.
The rule also places new obligations on transmission businesses to adopt a more consistent, transparent and coordinated approach when planning their networks.
The AEMC report cites evidence of over 120 generators with public intentions to connect to the National Electricity Market and forecasts that 30 to 50 may connect by 2020.
AEMC said 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, ultimately minimising the long term costs of electricity for consumers.
Energy Networks Australia CEO John Bradley said allowing transmission networks to compete for new infrastructure investment should result in lower prices for customers.
“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,” Mr Bradley said.
“It’s a reform to help enable the efficient connection of more renewable and low-emission generation technologies across the National Energy Market.
“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.
AEMC outlined that increased transparency should 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.
They will also be required to consider investment options in another transmission business’s region so options are not limited by geography or state boundaries.
The new rule is aimed to foster better planning and coordination which should help businesses to identify the lowest cost option to meet future network needs.
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.