EUAA Submission: COGATI Implementation – Access and Charging Consultation Paper
Emily Wood | April 26, 2019
We welcome the opportunity to make a submission to the COGATI Implementation – Access and Charging Discussion Paper.
We appreciate the AEMC allowing additional time for stakeholders to provide input into this important consultation and the clarification it has provided in the Supplementary Information Paper released on 4 April.
The EUAA made a submission to the Coordination of Generation and Transmission and Investment (CoGaTI) Options Paper in October 2018 and we are pleased that a number of issues we raised in that submission have been acknowledged by the AEMC.
We are also pleased that a number of our recommendations, in particular the need for co-contribution to network asset augmentation are now being contemplated. We recognise that it will take some time and require substantial stakeholder consultation to bring about these reforms but we are satisfied they are now firmly on the AEMC agenda.
The key issue we raised in our submissions to the CoGaTI process and to several RIT-T assessments has been to challenge the assumption that consumers would continue to pay the full cost for network augmentation including for proposed Renewable Energy Zones (REZ) and interconnectors such as Energy Connect (NSW to SA interconnector), Project Marinus (Tas to Vic interconnector) and deep augmentation costs to facilitate Snowy 2.0.
To be clear, the EUAA are not opposed to new network assets being built to facilitate new generation or for interconnectors to be built that allow market participants and the market operator greater flexibility. Our concerns revolve around the assumption that a vast majority of the costs associated with these projects will be included in the Regulated Asset Base (RAB) of the network companies involved.
We note that AEMO are pursuing the next iteration of the Integrated System Plan (ISP) that is running parallel to the CoGaTI process. Both are important for consumers as they set the direction of energy market investment. While the ISP and CoGaTI may at times appear to be seeking to resolve the same problems we see the key distinction between the two being the ISP has a focus on what transmission we should build while the CoGaTI has a focus on who is best placed to manage the risks and costs associated with these new assets.
With this in mind, AEMO should ensure the ISP retains its role as a guide to investment decisions rather than becoming a prescriptive plan that must be actioned without regard to proper regulatory oversight and a consumer focussed cost benefit analysis. Further to this, we do not see a role for AEMO or the ISP to direct investment decisions by market participants.
The role of the AEMC and CoGaTI should be to create a set of rules and market-based mechanisms that incentivises the right type of investment in both generation and network augmentation. In doing this it should also ensure that these new rule and mechanisms create a more equitable cost and risk sharing framework so that consumers only pay for the benefits and services they actually receive.
We would like to see a greater level of coordination between AEMO and the AEMC such that AEMO identifies the need and the AEMC provides the means to achieve the desired outcome that is in the best interests of consumers.
See attached for full submission…
