Review of the Regulatory Investment Test for Transmission (RIT-T)

Publication date: Friday, 30th September 2016.

At its 19 August 2016 meeting the Energy Council tasked officials to undertake a review of the Regulatory Investment Test for Transmission (RIT-T) by December 2016.

The RIT-T applies to investments in new electricity transmission assets in the National Electricity Market (NEM) where the estimated capital cost exceeds $6 million, subject to certain exceptions.

The review will assess whether it remains appropriate in the changing energy market, with a particular focus on its application to interconnectors given their importance to all regions in the NEM.

As part of public consultation for the review, consumer bodies, network service providers and other interested stakeholders were invited to submit written feedback by COB AEDT Thursday 20 October 2016 to the Energy Council Secretariat:  

The Consultation paper for the RIT-T review, the terms of reference and submissions are below.


RIT‑T Review report

The RIT-T review considered the appropriateness, effectiveness and efficiency of the test with a focus on the following areas:

  • the balance between timeliness and rigour

  • the extent to which the RIT-T’s current design is able to capture the full costs and benefits associated with transmission projects

  • whether the RIT-T is being applied appropriately

  • whether the RIT-T is appropriate to facilitate strategic interconnection investment decisions and the effectiveness of current governance arrangements.

Broadly, the review found that the RIT-T in its current form remains the appropriate mechanism to ensure that new transmission infrastructure in the National Electricity Market (NEM) is built in the long term interests of consumers.

Consistent with its findings, the review made recommendations to improve existing arrangements, including to ensure that:-

  • system security and emission reduction goals are adequately considered

  • low probability but high impact events like the South Australian system black event in September are appropriately taken into account

  • information about transmission networks is more accessible to support more effective engagement by non-network providers.

    At the December Energy Council meeting ministers agreed the recommendations of the review, including that the AEMC further explore the merits of increasing Australian Energy Regulator oversight of the RIT T.

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Council Priority Issue