Submission to AER Review of the cost benefit analysis and regulatory investment test guidelines

PIAC submitted a criticism of the Australian Energy Regulator’s draft amendments to the cost benefit analysis guidelines and Regulatory Investment Test (RIT) application guidelines.

The amendments aim to increase the rigour of cost estimations for transmission and distribution projects, and to provide guidance about how project proponents should employ the material change in circumstances (MCC) mechanism to trigger projects to reassess whether or not they deliver positive net benefits.

Both of these are key protections for consumers who ultimately pay for these projects, and try to manage the phenomena of project cost blowouts.

Unfortunately, the amendments do almost nothing to manage these risks, and we can expect project proponents to continue to ignore the MCC mechanism, and consumers continue paying for projects that ultimately cost billions more than their early estimates.