Reduce electricity project delivery timeframes

The existing electricity regulatory framework requires distribution and transmission network businesses to undertake investment tests for new infrastructure that is part of their regulated asset base, known as the Regulatory Investment Test for Transmission (RIT-T) and the Regulatory Investment Test for Distribution (RIT-D). The aim of these investment tests is to ensure the prudency and efficiency of network investment, including consideration of non-network options, so customers do not pay more than they should for the network.

Existing investment tests, such as the RIT-T, take two years to complete. This timeline presents challenges within an operating environment with increasingly high rates of change. The challenge with the existing process is compounded by the limited control the market bodies have of these changes, which can be behind-the-meter. The cumulative impacts of these changes require a nimble approach from network owners to avoid impacts on the grid.

While the intent of the RIT-T and RIT-D tests is to ensure the robustness of the investment decision is preserved, there is an opportunity to streamline the process to reduce project delivery timeframes and regulatory burden. This can be achieved by:

•  reviewing the existing $6 million cost threshold with a view to increasing it to only capture material investment

•  exempting planned component upgrades and renewals or projects with unviable non-network options that are included in network service providers' approved five-year revenue determinations from the RIT-T and RIT-D. For example, projects that involve secondary systems at substations.

To provide the same outcome as the RIT-T and RIT-D (to demonstrate the efficiency and prudency of the investment decisions), network businesses should still develop business cases for material projects that do not require an investment test, so they can be scrutinised through regulatory processes. This streamlining of the RIT-T and RIT-D process may require a rule change.

There may be a further opportunity in the future to review the need for the RIT-T and RIT-D as network businesses embed their business case and investment decision processes, which may deliver the same investment Justification outcomes.