AER to review ElectraNet's proposed interconnector from SA to NSW

The Australian Energy Regulator (AER) has received a request from ElectraNet to determine that the investment identified through its ‘SA Energy Transformation’ Regulatory Investment Test for Transmission (RIT-T) satisfies the requirements of the RIT-T cost-benefit analysis.

ElectraNet's RIT-T explored options for reducing the cost of providing secure and reliable electricity to SA in the near term, while facilitating the longer-term transition of the energy sector across the National Electricity Market. ElectraNet released its final RIT-T report on 13 February 2019, which identified its preferred investment to build a new 330 kV interconnector between Robertstown in mid-north SA and Wagga Wagga in NSW, via Buronga and with an augmentation between Buronga and Red Cliffs.

On 5 June 2019, we commenced the formal process under clause 5.16.6 of the National Electricity Rules (NER) to consider ElectraNet’s request to determine whether the interconnector satisfies the RIT-T cost-benefit analysis. The formal process commenced after we finalised a dispute on whether ElectraNet’s RIT-T had inadequately considered the consequences of system security risks. We found that ElectraNet’s RIT-T was compliant specifically on the matters raised in the dispute notice, but the next step would be to consider whether interconnector met the broader requirements of the RIT-T cost-benefit analysis.

Under clause 5.16.6 of the NER, the AER has no more than 120 business days to make a determination, subject to requests for further information. We expect to make a determination by no later than the fourth quarter of 2019.

An AER determination that ElectraNet’s proposed investment satisfies the requirements of the RIT-T is required before we can make a contingent project decision to amend our ElectraNet 2018-23 revenue determination and TransGrid 2018-23 revenue determination to account for the costs of the project in SA and NSW.

Background

The RIT-T is a cost-benefit analysis that transmission businesses apply before making network investments in excess of $6 million. The purpose of the RIT-T is to identify the network or non-network investment option with the highest net economic benefits across the National Electricity Market. This promotes efficient investment decisions and helps ensure that consumers pay no more than necessary for electricity network infrastructure.

Under clause 5.16.6 of the NER, a transmission business can request a determination from the AER that its investment identified through a RIT-T satisfies the requirements of the RIT-T cost-benefit analysis.

Sector: 
Segment: 
Issued date: 
25 June 2019
AER reference: 
AC 85/19
Contact: 
General enquiries - RIT RIT@aer.gov.au