The Australian Energy Regulator (AER) has today commenced public consultation on the contingent project applications it received from ElectraNet and TransGrid for Project EnergyConnect.
Project EnergyConnect is a proposal by both ElectraNet and TransGrid to build a new transmission line linking South Australia and New South Wales with an added connection to north west Victoria. The proposed full cost of Project EnergyConnect is $2.4 billion and will involve the construction of a new 330 kilovolt above ground transmission line, with approximately 800 megawatt transfer capacity.
Project EnergyConnect will connect South Australia and New South Wales with an expectation of long term reliable energy supply for South Australia, including lower power prices and improved energy security.
The contingent project applications submitted by both ElectraNet and TransGrid propose Project EnergyConnect is funded by additional transmission charges.
In making a decision on the applications, the AER will review ElectraNet and TransGrid’s proposals together so the full cost of the project is considered as part of the process. The AER will review the reasonableness of the proposed cost of Project EnergyConnect with the aim of ensuring consumers pay no more than necessary for safe and reliable energy.
Since its Regulatory Investment Test Transmission (RIT-T) assessment, ElectraNet has updated its cost benefit analysis to incorporate the revised costings and new inputs and assumptions under the 2020 Integrated System Plan (ISP). The AER accepts that it is not unreasonable to rely on the inputs and assumptions from the ISP and that, based on ElectraNet’s updated cost benefit analysis, the project remains the preferred option. A letter was sent from the AER to ElectraNet to that effect.
To complete consultation and analysis of the contingent project applications by the end of this year, the AER required the complete applications to be submitted by mid-September. While this was not achieved, the AER will make every effort to deliver both a thorough and timely decision.
A timeline and process to make the final decision on Project EnergyConnect is available on the AER website.
Submissions are invited on the contingent project applications for Project EnergyConnect and are due by 30 October 2020.
Project EnergyConnect is a priority in the Australian Energy Market Operator’s 2020 ISP and was the subject of a RIT-T assessment.
The RIT-T is a cost-benefit analysis that transmission businesses apply before making network investments in excess of $6 million. The AER’s assessment of the RIT-T was completed in January 2020. The AER’s role is to now determine whether the proposed costs for the investment in the contingent project applications are efficient.
The contingent project applications outline the amount of revenue the businesses are seeking to deliver the proposed project. The amount of revenue approved by the AER through a contingent project application is added to the network business's five-year revenue determination to allow costs to be recovered from consumers.
More information about the ISP and RIT-T process is here.