Transmission Loss Factors rule change

PIAC responded to the AEMC’s consultation on the transmission loss factor rule change. We note as the energy system is transforming a framework for optimal system-wide investment is required to ensure the transition is delivered in a timely and cost-effective way. This framework should identify the most efficient system-wide solution, deliver the solution in a timely and efficient way, and recover costs for the solution in the fairest and most equitable way. 

We consider reforms to the treatment of transmission loss concern the allocation of responsibilities and incentives, and the recovery of costs. In light of this, we are unsure of the merit of the model proposed by Adani Renewables and encourage the AMEC to consider other options. 

We also note that any changes to Marginal Loss Factors (MLFs) or transmission losses more broadly must follow and complement the overarching reforms to the generation and transmission frameworks such as those currently being developed through the AEMC’s COGATI review.

PIAC also presents two alternate models to provide greater certainty whilst still providing a locational signal for new generation projects: an insurance product for MLFs in an energy zone and locking in MLFs for a period.