RE-Alliance has welcomed the recent release of the Australian Energy Market Commission’s (the Commission’s) Final Report of Stage 2 of the Transmission Planning and Investment Review. We particularly welcome recommendations concerning improved transmission company consultation with landholders and increased clarity in how increased benefit payments to landholder hosts of new transmission infrastructure may be funded.
Recap on the role of the Commission and the Australian Energy Regulator (the Regulator)
The Commission is the rule maker for Australian electricity and gas markets. It makes and amends the National Electricity Rules, National Gas Rules and National Energy Retail Rules and provides policy advice to governments.
The Regulator regulates electricity networks and sets the amount of revenue that network businesses can recover from customers for using these networks. They also enforce the laws for the National Electricity Market in southern and eastern Australia.
The Commission’s Transmission Planning and Investment Review has been underway since August 2021 and aims to improve the timeliness and efficiency of the delivery of major electricity transmission projects.
The Commission has recognised “that obtaining social licence for the delivery of major transmission projects in the National Electricity Market is a significant issue that can have a major impact on their timely and efficient delivery”.
In a report published mid last year RE-Alliance recommended that:
transmission companies should consult earlier with affected communities and this should occur during the initial cost benefit assessment planning stage, called the Regulatory Investment Test for Transmission. People consulted should include:
- landholders and asset owners along potential transmission line routes;
- local community members and groups;
- local Councils and State Planning Departments; and
- First Nations, environment and other special interest groups.
- increased landholder compensation and community benefit sharing be facilitated by the Commission for communities affected by new transmission infrastructure and
- the Commission should clarify whether community benefit sharing can be funded under the current National Electricity Rules.
We are delighted that the Commission’s Final Recommendations respond to these important issues.
On community engagement, the Commission has recommended that the Regulator provide guidance to stakeholders on how transmission companies should engage and consult with local communities and other stakeholders affected by major transmission projects at key stages in the planning process.
The Commission has also recommended changes be made to the National Electricity Rules to ensure that the expectations on transmission companies to engage and consult local communities and other affected stakeholders at key points in the planning process are consistent for all major transmission projects identified through the Integrated System Plan.
Importantly local councils, local community members and other relevant community stakeholders will now be included in consultation activities and this consultation will occur earlier than has been the case previously. This improved consultation will be compulsory under the NER when the rule change comes into force.
The result should now be that consultation with communities occurs in a consistent way across all transmission projects at a time and in a way that key project decisions like route selection are genuinely informed by and responsive to community feedback.
On cost recovery for benefit sharing arrangements the Commission has recommended “that the Regulator provide additional guidance to stakeholders regarding how the costs associated with building and maintaining social licence for major transmission projects should be considered and assessed as part of the regulatory process”.
This includes guidance on:
- how costs associated with activities such as benefit sharing payments may be recovered from consumers, including through the Regulatory Investment Test for Transmission and
- clarifying how efficient costs are defined under the different cost recovery avenues.
RE-Alliance had previously recommended that the Commission and the Regulator consider the development of a Guideline to provide advice on what efficient costs might look like, so we welcome this recommendation being taken up by the Commission in its Final Report.
Taken together with the NSW Government’s recently announced Strategic Benefit Payments Scheme, these initiatives, when implemented, will ensure that:
- landholders and host communities hear about proposed transmission developments much earlier in the process than has been the case in the past,
- these communities will be consulted with, and
- at this stage, in NSW at least, there will be an additional benefit sharing payment for hosts of new transmission infrastructure, on top of existing compensation arrangements under the NSW Land Acquisition (Just Terms Compensation) Act 1991.
We commend the Commission’s comprehensive work on social licence issues within the Transmission Planning and Investment Review process and the NSW Government’s new Strategic Benefit Payments Scheme. We hope similar initiatives will be rolled out in other jurisdictions in the near term.