PIAC lodged a submission to the Australian Energy Regulator (AER) in response to TransGrid’s cost pass through application for the 2019-20 bushfire season.
Any such cost pass through must establish that the expenditure is not only efficient but also that it is additional to what has already been allowed to prevent ‘double dipping’ from consumers.
While PIAC welcomes that TransGrid has taken steps to ensure that the costs incurred are prudent and efficient, we are unconvinced the full amount sought should be allowed. It is unclear whether it is entirely additional to what was allowed in the 2018-23 revenue determination.
Cost pass through applications such as this highlight the issues of risk management for extreme weather events and how standards for reliability are to be treated. With a changing climate and projections of more frequent and more severe weather events, we need mechanisms that deliver a resilient energy system where costs are distributed fairly. It would be timely for a more strategic review to consider how to fairly incorporate these into the risk allocation and cost recovery frameworks of the NEM.
