Digital Strategy

As the Information and Communication Technology (ICT) sector is only expected to continue growing to support electricity networks, the same can be said for the expenditure allocated to ICT programs by electricity networks.

ICT now makes up a significant portion of total proposed capital expenditure. The Australian Energy Regulator (AER) has published the Guidance Note: Non-network ICT capex assessment approach in November 2019, which details the framework utilised to assess network forecast non-network ICT expenditure. Electricity networks are required to separate out their proposed projects into recurrent and non-recurrent and provide a sufficient level of justification for each. The AER also requires non-recurrent projects to be categorised into a further 3 sub-categories dependent on the identified need for the project.

CutlerMerz has developed an ICT Expenditure Framework over several years of supporting networks justify ICT programs. Our framework categorises ICT projects as required by the AER, and applies a justification approach according to the characteristics of each project. For recurrent expenditure we apply a macro level justification using a Base-Step-Trend approach. Non-recurrent projects are allocated into stand-alone project groupings and additional content is prepared for the newly structured project briefs, with a focus on the economic justification of the proposed investments. This process allows us to quantify and justify key metrics to develop project documentation to be presented to the AER, customers, and other stakeholders.

Through our extensive knowledge and experience of industry best practice and the requirements outlined in the AER’s Guidance Note we are well positioned to support networks develop detailed ICT strategies and plans. Our strategy includes an assessment of client’s current position, application of our ICT Expenditure Framework, assessment of projects using economic justification models, alignment of proposed projects with business core values, and business case documentation.