On 28 September 2020, the AER published its final decision in relation to ElectraNet’s Eyre Peninsula Reinforcement contingent project application.
Our decision will provide ElectraNet with the incremental revenues required to deliver the Eyre Peninsula Reinforcement project as soon as practicable, while also ensuring that consumers pay no more than necessary to deliver the project.
The Eyre Peninsula Reinforcement project involves the augmentation of the transmission network on the Eyre Peninsula in South Australia. The project will enable ElectraNet to replace an ageing asset and improve both the reliability and security of supply to homes and businesses on the Eyre Peninsula. Replacing the existing transmission line will also save the backup generation costs currently being paid by consumers to secure supply to the area, and costs for repairing the existing transmission line.
ElectraNet proposed total capital expenditure of $290 million ($2017-18) to deliver the project within the 2018–23 regulatory control period. Our decision departs from ElectraNet’s application by providing for a slightly reduced forecast of $280 million. We accepted all other elements of ElectraNet’s application.
On 22 May 2020, ElectraNet submitted a contingent project application to the AER seeking an increase in its allowed revenue to replace the existing transmission line supplying the Eyre Peninsula. The Eyre Peninsula Reinforcement project involves the installation of:
- a new double-circuit line from Cultana to Yadnarie that is initially energised at 132 kV, but which has the option to be energised at 275 kV if required in the future;
- a new 132 kV double-circuit line from Yadnarie to Port Lincoln, and
- associated substation works at Yadnarie, Cultana, Middleback, Wudinna and Port Lincoln.
This application relates to ElectraNet’s preferred network investment option identified through the Eyre Peninsula Electricity Supply Options Regulatory Investment Test for Transmission (RIT-T) completed on 18 October 2018. On 11 April 2019, the AER determined that the preferred option identified by ElectraNet satisfied the requirements of the RIT-T.
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.
Our role is to determine the prudent and efficient capital and operating costs required to provide a reliable electricity supply to the Eyre Peninsula most efficiently into the future, and the incremental revenue that ElectraNet may recover within the 2018–23 regulatory control period as a result of undertaking the project.