Electricity Transmission Regulations 1996

For the purposes of this regulation, an augmentation is commercially viable if —

in the case of the Electricity Networks Corporation, in the corporation’s reasonable opinion —

it will recover within a reasonable time the costs, the capital investment and a reasonable rate of return on the capital investment in respect of the augmentation as contemplated by clause 5 of Schedule 5 to the Act (as in force before the repeal of that Schedule by the Electricity Transmission and Distribution Systems (Repeal and Related Provisions) Regulations 2007), and not increase the charges payable by existing users; and

it has sufficient allocated capital funds to undertake the augmentation, having regard to sections 127 and 128 of the Electricity Corporations Act 2005;

in the case of the Regional Power Corporation, in the corporation’s reasonable opinion —

it will recover within a reasonable time the costs, the capital investment and a reasonable rate of return on the capital investment in respect of the augmentation as contemplated by clause 5 of Schedule 5 to the Act (as in force before the repeal of that Schedule by the Electricity Transmission and Distribution Systems (Repeal and Related Provisions) Regulations 2007), and not increase the charges payable by existing users; and

the division of the corporation responsible for operating its electricity transmission network has sufficient allocated capital funds to undertake the augmentation, having regard to sections 127 and 128 of the Electricity Corporations Act 2005.

The reasonable rate of return on the capital investment associated with a proposed augmentation contemplated by subregulation (4)(c) or subregulation (5)(b) is to be determined by a corporation taking into account —

the corporation’s cost of capital and its components;

the potential future use of the augmentation by existing and potential users;

the financial viability of the applicant and the applicant’s business;

the impact of the capital investment upon the performance targets and other measures of the corporation’s performance as set out in any applicable statement of corporate intent under the Act.

The reasonable time within which the costs, the capital investment and the reasonable rate of return in respect of a proposed augmentation contemplated by subregulation (4)(c) or subregulation (5)(b) must be recovered is to be determined by a corporation taking into account —

the anticipated commercial life of the augmentation; and

the purpose for which the applicant requires the electricity transmission capacity the subject of the relevant access offer,

If —

a corporation and a user enter into an access agreement;

the services to be provided under the access agreement include connection services using a connection that is not an exempt connection;

the corporation is not able to reliably provide those connection services without augmenting that connection; and

the augmentation concerned is not commercially viable without any capital contribution,

If —

a corporation and a user enter into an access agreement;

the corporation is not able to reliably provide the access services which are the subject of the access agreement without augmenting the electricity transmission network to either transport electricity on the network or to link the network to an exempt connection; and

the augmentation concerned is not commercially viable without any capital contribution,

If subregulation (4) or subregulation (5) requires a user to make a capital contribution, then —

the amount of the capital contribution is equal to the amount that would be required to make the augmentation commercially viable; and

the capital contribution must be paid to the corporation in the manner and at the time set out in the access agreement.

A proposed augmentation satisfies paragraph (a) of the commercial viability test set out in subregulation (1) if —

the discounted present value of the future cash flows anticipated in respect of the augmentation over the reasonable time in respect of the augmentation is determined in accordance with subregulation (3), using a real discount rate equal to the reasonable rate of return in respect of the augmentation determined in accordance with subregulation (2); and

that discounted present value is positive.

If —

a corporation and a user enter into an access agreement;

the services to be provided under the access agreement include access services in respect of a connection that is not an exempt connection; and

the corporation is obliged under an existing agreement to repay an amount of money to a person if it provides those services,

If —

a corporation makes an access offer; and

the access offer contemplates the provision of connection services or ancillary services using an exempt connection,