Submission to Coordination of Generation and Transmission Investment options paper

PIAC lodged a submission to the AEMC’s Coordination of Generation and Transmission Investment (COGATI) review options paper. The review explores a number of issues – in particular, it puts forward a range of options to implement the Integrated System Plan (ISP) developed by AEMO. The ISP outlines a development path for network investment to unlock new generation and maintain reliable supply.

The National Energy Market (NEM) is in the middle of a transformation from an energy system relying primarily on centralised, fossil-fuel generation with passive demand, to one with a low- or zero-emission generation fleet interacting with more sophisticated and active demand-side behaviour. In order to fully unlock the benefits of this transition, some investment will be required but this must be balanced so as not to exacerbate the affordability crisis facing many residential, commercial and industrial consumers.

While the ISP goes some way in doing this, PIAC considers that an important next step remains lacking: how these costs and benefits are shared by different consumers. This can mask serious concerns of equity as, under existing regulatory frameworks, some groups may potentially bear the majority of the total costs but only receive a small portion of the total benefits.

PIAC considers that deciding on and establishing a single method for implementing the ISP development path to be premature. We expect future ISPs will continue to evolve and improve due to a number of factors. Instead, PIAC describes the need for a staged approach to integrating the ISP into the planning and regulatory framework for strategic projects.

PIAC does not agree with concerns from various stakeholders that the development plan put forward in AEMO’s ISP cannot be delivered on time due to the existing NEM planning and regulatory processes. Further we oppose any proposals that these processes must be, at best, relaxed or, at worst, circumvented altogether.

Instead, we consider that the strategic projects outlined in the ISP require a sperate assessment framework which reflect their strategic nature compared to the more incremental network investments the current regulatory framework is better suited to. If an alternative cost-recovery mechanism is required, PIAC considers the AER would be best-placed to make a formal determination as to what this should be.