The challenge

Jemena Electricity Networks is a regulated utility, with its annual revenue forecast approved by the Australian Energy Regulator on a five-year cycle

Jemena is a provider of gas and electricity infrastructure across northern Australia and Australia’s east coast, and owns more than $11 billion worth of major utility infrastructure. The client is responsible for over 11,000km of electricity distribution network lines in North-West Melbourne, servicing more than 370,000 homes and businesses.

JEN sought assistance with several regulatory activities including:

• Developing a presentation to be presented to the Australian Energy Regulator (AER) related resilience capital expenditure (capex) options open to them which may be included in its 2026–31 regulatory determination proposal. 
• Preparation of a business case regarding resilience capex to be submitted to the AER
• Preparation, peer review and uplift of several capex business cases for submission to the AER.

Our solution

In total, we developed over 10 capex business cases for submission to the AER, as well as a resilience related presentation for JEN

The project was ultimately delivered in three stages.

In the initial stage, the team developed a resilience related replacement capex (repex) presentation for JEN to present to the AER.

The second stage included drafting a resilience-related business case, in addition to reviewing other BAU business cases to support JEN’s regulatory proposal for the 2026–31 regulatory control period. Subsequently, we were further engaged to prepare an additional six routine and non-routine repex business cases for submission to the AER.

 Relevant topics and asset types included:

• Resilience expenditure
• Zone substation redevelopment
• Substation site security (including Security of Critical Infrastructure Act obligations)
• The JEN Network Development Strategy + Methodology
• Routine underground cable, switchgear, overhead service lines and distribution transformer related expenditure
• Non-routine switchgear related expenditure

Our impact

We developed a presentation on resilience-related capex covering how JEN will respond to AER and Victorian Government reports and reviews related to resilience in their initial regulatory proposal, how JEN will respond to resilience issues mentioned in its consumer consultation program, and outlined aspects of resilience related modelled and unmodelled repex forecasts.

We reviewed a range of business cases and investment briefs and provided uplift and advice to improve overall regulatory proposal capability of acceptance.

We drafted several routine and non-routine expenditure business cases in response to the AER’s draft decision. This included the development of a quantifiable benefits model to support the rationale for expenditure, which had not previously been done for these asset types in JEN’s initial regulatory proposal.

All relevant business cases were submitted to the AER within required timeframes.

Key insights

• The development and drafting of business cases by distribution network service providers (DNSP) is a key activity in providing justification to the AER for their forecast capex. In recent years, the AER has placed high importance on DNSPs engaging with its customers to understand what they want from their DNSPs and how best they can manage and build out their networks for the future. 
• Throughout the development of the business cases we uplifted and produced for JEN, we were cognisant of the fact we needed to balance our justification of forecast expenditure between strict quantitative modelling and recognising and implementing what JEN’s customers have said throughout its various customer engagement forums.
• Striking this evidential balance and undertaking a methodical approach closely aligned to NER requirements and AER guidelines, ensured that the proposed expenditure programs and dollar amounts outlined in the business cases have the highest likelihood of approval by the AER.