Transmission use of system – pricing methodology (Victoria)

25/11/2020
Market Network Service Provider
StageThird Stage
ConvenorAEMO NSP
Initiated25/11/2020
Accepting submissions?Yes
Submissions close07/01/2021

Notice of consultation

National Electricity Rules

Date of Notice: 25 November 2020

This notice informs stakeholders and all other interested parties (Consulted Persons) of the second stage of consultation to the Transmission Use of System (TUOS) – Pricing Methodology (PM).

On 16 September 2020, AEMO published an Issues Paper for amendments to the replacement to the current Approved Amended Pricing Methodology for Prescribed Shared Transmission Services for 1 July 2014 to 30 June 2019. 

No submissions were received to the issues raised in the Issues Paper.

This consultation is being conducted under clause S6A.4.2(f) of the National Electricity Rules (NER) which requires AEMO to, as and when required by the AER, “submit to the AER (1) a proposed pricing methodology (PM) relating to shared transmission services that are prescribed TUOS services or prescribed common transmission services.

What does the PM cover?

Clause S6A.4.2(f) limits the PM to shared transmission services that are prescribed TUOS services or prescribed common transmission services

This means that in terms of the annual allowable revenue that AEMO is permitted to recover, the PM allows recovery of costs that are in the nature of prescribed TUOS services costs and prescribed common transmission services

AEMO intends to develop the PM in consultation with stakeholders prior to submitting it to the AER for its consultation process. When approved, the new PM will apply from 1 July 2022 for a period of 5 years.

The PM covers the way in which recoverable costs (revenue) are to be recovered from each network user (connection point). Consequently, it deals with how allowable revenue is distributed to network users in terms of the three types of prices chargeable at each connection point (locational, non-locational and common service). 

The costs that make up the revenue that is recovered by AEMO is dealt with in the Revenue Methodology. The delineation is shown in the diagram below.

Enforceable undertaking 

The current Pricing Methodology nominally ended on 30 June 2019, but its validity has been extended to 30 June 2021 and has been further extended until 30 June 2022 to allow time for both AEMO and the AER to conduct their consultations.

The consultation process 

The consultation process is outlined below. Dates are indicative and subject to change. 

Process stage Date
 Initial Consultation (Issues Paper)  Submissions due 29 September (Completed)
Consultation paper 25 November 2020 – 7 January 2021
Feedback to stakeholders 22 February 2021
Submit proposed PM to AER May 2021

Pricing methodology stakeholder forum

Network users who would like to discuss the potential impact of the proposed changes in the Pricing Methodology on their pricing and charging outcomes should contact AEMO on pricing.methodology@aemo.com.au to request a short meeting

Invitation to make submissions and publication

AEMO invites written submissions on the Consultation Paper. 

All submissions will be published on AEMO’s website, other than confidential content.

If relevant, please identify any parts of your submission that you wish to remain confidential and explain why. AEMO may still publish that information if it does not consider it to be confidential but will consult with you before doing so.  

Please note that material identified as confidential may be given less weight in the decision-making process than material that is published. 

Closing date and time 

Submissions in response to the Consultation Paper and proposed Pricing Methodology should be sent by email to pricing.methodology@aemo.com.au to reach AEMO by 5.00pm (Melbourne time) on 7 January 2021

All submissions must be forwarded in electronic format (both pdf and Word). Please send any queries relating to this consultation to the same email address.  

AEMO is not obliged to consider submissions received after the closing date and time. However, it retains the right to do so at its absolute discretion. 

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