ElectraNet - Main grid system strength contingent project

Sector: 
Segment: 
Status: 
Commencement date: 
28 June 2019
Effective date: 
23 August 2019
Contact: 
AER General inquiries AERInquiry@aer.gov.au
AER reference: 
64922

Overview

On 28 June 2019, ElectraNet 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.

The contingent project application follows a determination we made on 18 February 2019 that ElectraNet's proposed investment to install synchronous condensers satisfies an economic evaluation equivalent to a regulatory investment test for transmission (RIT-T). This determination was a trigger event for the contingent project and 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 this contingent project assessment.

Interested parties were invited to make submissions on ElectraNet’s contingent project application by close of business 15 July 2019. We received three submissions.