Regulatory Investment Test for Transmission

The Regulatory Test is the now superseded cost-benefit analysis which was applicable to regulated electricity transmission investment assessments initiated prior to 1 August 2010 to ensure the recommended investment solution was the least cost option. Note that SA Power Networks continues to apply the Regulatory Test to major distribution-driven network augmentation projects, including those involving electricity transmission options.

The RIT-T is a cost benefit analysis applicable to relevant regulated electricity transmission investments initiated from 1 August 2010 onwards, to ensure the recommended solution is the most economic. It requires consideration of the costs of options to address the identified need, as well as the potential benefits to the broader market. It seeks a solution to deliver the greatest net benefit to the market.

The Energy Reform Implementation Group (ERIG) conducted a review of the operation of Australia’s energy sector when and found that the investment decision-making criteria in the Regulatory Test were appropriate and should be retained. However, the ERIG recommended that the reliability and market benefits sections of the Test should be amalgamated.

Consultations were conducted on the framework and the outcome was that the new RIT-T process would remove the distinction between reliability-driven projects and projects motivated by the delivery of market benefits. Proposed electricity transmission projects are now assessed against both local reliability standards and their ability to deliver broader benefits to the market.

The RIT-T provides a single framework for all electricity transmission investments and removes the previous distinction in the Regulatory Test between reliability-driven projects and projects motivated by the delivery of market benefits.

Yes. According to the NER, if the most expensive technically and economically feasible option for a regulated electricity transmission investment is more than $6 million, ElectraNet is required to consult with registered participants, the Australian Energy Market Operator (AEMO) and interested parties using the RIT-T market consultation process. The extended consultation timeframes involved in applying the RIT-T increases the opportunity for market input into this process.

The application of the RIT-T ensures that the recommended investment solution is the most economic option, including consideration of non-network options (for example, embedded generation or demand-side response), that satisfies the identified need while meeting mandated reliability standards and the technical requirements of the National Electricity Rules (NER).