The ERA is required to develop a guideline on factors the ERA proposes to consider when approving Western Power’s capital expenditure and methods that can be used to value net benefits.
The guideline is a new requirement under the Electricity Networks Access Code 2004. It must include:
- The factors the ERA proposes to consider when making a determination under the new facilities investment test set out in section 6.52 of the Access Code.
- Acceptable methods for valuing net benefits by a service provider, which must include, but are not limited to, for the SWIS, consideration of changes in costs and benefits for participants in the Wholesale Electricity Market.
The new facilities investment test is a determination of whether expenditure can be added to the capital base of the covered network and recovered from network users through regulated tariffs.
The test includes provisions to approve expenditure that provides a “net benefit” in the covered network that justify the approval of higher tariffs. Net benefits are also relevant to the approval of non-capital costs under section 6.41 of the Access Code and the regulatory test set out in chapter nine of the Access Code.
On 15 October 2021, the ERA published a draft guideline for consultation. Submissions received are published below.