Test an actionable ISP project once, not twice
A project identified as needed by a whole-of-system cost-benefit process then runs its own three-stage cost-benefit process to establish that it is needed. The actionable ISP framework was built to remove that duplication and removed only part of it.
Steps this would change
- Build a major transmission line — sequential easement pathway — Project specification consultation report and consultation
- Build a major transmission line — sequential easement pathway — Project assessment draft report and consultation
- Build a major transmission line — sequential easement pathway — Project assessment conclusions report
Rationale
AEMO publishes the Integrated System Plan every two years. It models the whole system against scenarios, consults extensively, identifies optimal development paths, and designates particular projects actionable.
An actionable project then begins the regulatory investment test: a project specification consultation report and consultation, a project assessment draft report and consultation, and a project assessment conclusions report. Three stages, each with a consultation period, running to years rather than months.
The AEMC has acknowledged that while the test delivers benefits for actionable ISP projects it significantly adds to the time taken to approve them, and has recommended streamlining it by removing duplication.
The proposal is that for a project already designated actionable in a published ISP, the first two stages collapse into the ISP consultation that has already occurred, leaving a single conclusions report that documents the option selected and the reasons. The AER retains the contingent project application, which is where consumer protection actually bites, and which this proposal does not touch.
The measured effect is smaller than the rhetoric. On the model this saves about 300 days off a 3,495 day critical path — under 9 per cent. Transmission is not slow because of the regulatory investment test. It is slow because of route selection, landholder engagement, environmental assessment and construction, in that order of contentiousness.
Anyone citing this site to argue that regulatory process is why Australia's grid is behind schedule is misusing it. The test is worth reforming because it is duplicative, not because it is the binding constraint.
Who acts: the AEMC, by rule change, on request from energy ministers.
What is being traded away
The case against is stronger than the modest saving justifies overriding, and this proposal should be treated as weak until that is answered.
The ISP and the RIT-T are not the same test and merging them loses something real. The ISP is a system-wide plan built on scenarios and assumptions about a future that keeps moving. The regulatory investment test is a project-specific examination of credible options, run closer to the decision, when costs are better known. Between an ISP designation and a final investment decision, costs have moved enormously on Australian transmission projects — EnergyConnect, Marinus Link, HumeLink and CopperString have all seen material escalation. The later test is the one that catches that, and removing it removes the checkpoint that exists precisely for the case where the plan's assumptions were wrong.
Consultation stages are how affected parties get standing. The PSCR and PADR consultations are among the few formal opportunities for consumer advocates, generators and communities to contest a project before it is locked in. Removing two of three consultation rounds is described here as removing duplication; from the outside it is removing two of the three times anyone has to listen.
Consumers carry the risk for decades. Transmission is a regulated monopoly and every approved dollar is recovered from every bill. A process that is duplicative and protective is not obviously worse than one that is streamlined and wrong, and the party who benefits from speed here is the proponent while the party who carries the cost of error is the household.
The honest version of this proposal is narrow: merge the first-stage consultation, keep the draft report stage, keep the AER application. That saves less and is much easier to defend.
Precedent
The actionable ISP framework already links the Integrated System Plan to the regulatory investment test and applies modified requirements to actionable projects. The AEMC has recommended streamlining the test by removing duplication. The direction is settled; the distance travelled is not.
Sources
- National Electricity Rules, rule 5.15A
- AEMC, Transmission Planning and Investment Review, recommendations on streamlining the regulatory investment test
- AEMO, published guidance on regulatory investment tests for transmission and the actionable ISP framework