1. SLIDE 1 AEMO INDEPENDENT ASSESSMENT OF NSW & TAS NETWORKS July 2014 PRESENTED BY NATIONAL PLANNING

2. SLIDE 2 AGENDA 1.Objective 2.Connection point demand forecasts 3.Network Assessment i.Principles ii.Scope iii.Assessment approach 4.Next Steps

3. SLIDE 3 OBJECTIVES To support the economic, reliable and secure development of the transmission grid in the best interest of consumers AEMO is developing o Independent Connection-point demand forecasts o Independent assessment of transmission network requirements

4. SLIDE 4 CONNECTION POINT FORECASTING DateAction December 2012 COAG asked AEMO to develop independent demand forecasts. o Independent reference for the AER’s revenue reset determinations. June 2013AEMO published a consistent methodology for transmission connection point forecasting. o Consulted and tested with industry. 2013-14AEMO developed forecasts for the first time in NSW and Tasmania – worked closely with NSPs to: o Access data and information o Test forecasting assumptions o Interpret results o Hold regular workshops plus in regular contact Regular updates to AER throughout process. Appointed external consultants o To ensure a quality process and to transfer knowledge to CP team o Independent adviser – ACIL Allen o Independent peer reviewer – Frontier Economics

5. SLIDE 5 NETWORK ASSESSMENT Began work in late 2013 Principles o Impartial - the assessment is fact based. o Transparent - the processes are replicable o Consistent - All jurisdictions in the NEM are treated the same o Consultative - AEMO is taking a consultative approach in completing the assessment AEMO will support the business’ proposal where the analysis supports the proposal AEMO will suggest alternative options where the analysis does not support the proposal

6. SLIDE 6 SCOPE In Scope o Augmentations  Identify potential network limitations over next 7 years  For each potential limitation, identify and suggest suitable options o Whether asset replacement is required given:  The network capability based on the current assets is sufficient to meet the reliability standards if the asset is retired and not replaced  There is an alternative, more efficient configuration of assets that would achieve the standard

7. SLIDE 7 SCOPE Out of Scope o Comment on the condition of the assets o Assessment of project costs o Detailed options analysis o Identify new strategic land and easement o Operational expenditure o Other infrastructures/provisions not directly related to shared transmission network and connection point assets (e.g. IT, Metering, Telecommunications)

8. SLIDE 8 ASSESSMENT APPROACH Capacity driven For a proposed augmentation: Condition driven For a proposed asset replacement: 1. Network capability What level of demand can the network support … for all N-x contingency events?if the asset was retired? 2. Projected demand Is there load at risk or market congestion expected... under the most critical contingency? after any beneficial network reconfiguration? If yes: Augmentation required within the regulatory period. Identify preferred option under jurisdictional reliability criteria. Replacement (with higher capacity) required within the regulatory period. If no:Augmentation not required. Replacement may not be required: Retirement, derating or replacement with lower capacity. 3. Assessment under applicable planning criteria Network investment

9. SLIDE 9 STAKEHOLDER ENGAGEMENT Worked closely with NSPs to o Access data and information o Hold regular workshops plus in regular contact Regular updates to AER throughout process. Appointed external consultants for reviewing complex projects

10. SLIDE 10 NEXT STEPS Next Steps o Finalise the forecasts and network assessments o Publish the reports on AEMO website by 31July 14