On 28 June 2019, ]ElectraNet has submitted an application to the AER seeking an increase in its allowed revenue to fund the installation of four high-inertia synchronous condensers in South Australia. The synchronous condensers will address a system strength gap in South Australia that the Australian Energy Market Operator (AEMO) declared in December 2016 and confirmed in September 2017.
We will determine the prudent and efficient capital and operating costs required to install the synchronous condensers, and the incremental revenue that ElectraNet may recover within the 2018-23 regulatory control period as a result of undertaking the project.
Funding for a 'contingent project' is permitted under clause 6A.8.2 of the National Electricity Rules through an adjustment to the maximum allowed revenue under ElectraNet’s 2018-23 revenue determination.
Network revenue determinations are made by us and set out the revenue network businesses can collect from electricity consumers through charges within a defined period.
Invitation for submissions
Interested parties are invited to make submissions on ElectraNet’s contingent project application by 15 July 2019.
We prefer that all submissions be sent in an electronic format in Microsoft Word or other text-readable document form and publicly available, to facilitate an informed, transparent and robust consultation process. Submissions should be emailed to AERinquiry@aer.gov.au with the subject line ‘ElectraNet – Main grid system strength contingent project application'.
Alternatively, submissions can be sent to:Mr Sebastian Roberts
General Manager - Transmission & gas
Australian Energy Regulator
GPO Box 520
Melbourne Vic 3001
Submissions will be treated as public documents and posted on our website unless prior arrangements are made with us to treat the submission, or portions of it, as confidential. Those wishing to submit confidential information are requested to:
- clearly identify the information that is the subject of the confidentiality claim; and
- provide a non-confidential version of the submission.
AEMO first declared a system strength gap in South Australia in December 2016, which it subsequently confirmed in September 2017. This followed a rule made on 19 September 2017 that requires transmission businesses to maintain minimum levels of system strength. AEMO subsequently declared an inertia gap in South Australia in December 2018. AEMO noted that high-inertia synchronous condensers in South Australia would address both the synchronous component of the inertia shortfall and the declared system strength gap.
On 18 February 2019, we responded to a request from ElectraNet to determine whether its proposed investment to install synchronous condensers satisfies an economic evaluation equivalent to a regulatory investment test for transmission (RIT-T). We found that ElectraNet's economic evaluation was sufficiently equivalent to a RIT-T, and the proposed investment satisfied that evaluation. Our determination did not reflect whether ElectraNet's $140–180 million estimated capital costs of the four synchronous condensers represented efficient and prudent costs, which are to be determined through our contingent project assessment.