The JEC made a submission to the Australian Energy Regulator’s draft amendments to their review of the cost benefit analysis guidelines and regulated investment test (RIT) guidelines.
The cost benefit analyses that appear at different parts of the transmission investment regulatory framework were being adjusted in light of the revised national energy objectives, which integrate emissions reduction as an explicit aim of the energy sector.
We argued that the guidelines as drafted pose a risk of charging consumers twice – or more – for emissions reductions benefits that arise as a result of transmission investments, which would result not in less carbon being emitted, but less efficient investment energy infrastructure options, from the perspective of the consumers, being selected.
We also pointed out that the value of emission reduction (VER) schedule, published by energy ministers last year, values emissions avoided in later years more in real terms. This is in direct opposition to the benefits of reduced emissions, where earlier reductions are worth more, at least for the purpose of mitigating global temperature rises. We noted that this could be easily resolved and the schedule could be reversed for the purposes of the cost benefit guidelines, and that doing this would be in the interests of consumers.
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