We're proposing a new approach to transmission pricing that would deliver significant long-term benefits to consumers and support the low-emissions transition at the least cost to consumers.
TPM reform is necessary and increasingly urgent
We believe the current TPM encourages inefficient use of and investment in the transmission grid.
Consumers should pay for the transmission assets they benefit from, and not pay for those they do not. That’s not how the current charges work. Under the current TPM, the costs of regional transmission investments are spread across all consumers, regardless of where they live or the benefits they get.
A benefit-based approach to transmission charges
We're proposing a benefit-based approach to allocating transmission costs. This means transmission customers who benefit from specific grid investments would pay for them.
We propose two new charges to replace the current regional coincident peak demand (RCPD) charge and the high-voltage direct current (HVDC) charge:
- Benefit-based charge to recover the costs of new grid investments and the depreciated costs of seven major existing investments based on their benefits to transmission customers
- Residual charge to recover any remaining transmission costs in a way which does not distort incentives to invest or use the grid.
The new charges are designed to be hard to avoid. We consider these new charges would minimise inefficient grid use and inefficient investments. The charges would send better signals to consumers about the economic cost of using the grid, without distorting grid use or investment in grid-connected generation and transmission alternatives.
See our consultation paper on this proposal and submissions received below.