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 that the investment identified through its SA Energy Transformation (SAET) Regulatory Investment Test for Transmission (RIT-T) satisfies the requirements of the RIT-T.
On 24 January 2020, in accordance with the requirements under clause 5.16.6 of the NER, the AER published its determination on whether the preferred option identified in the SAET satisfies the RIT-T.
The AER's determination is that the preferred option identified by ElectraNet through its RIT-T process maximises the net economic benefits in the National Electricity Market (NEM) and therefore satisfies the RIT-T.
This determination means that ElectraNet and TransGrid may now apply to us to recover the expected costs of the SA-NSW interconnector in transmission charges during the 2018-23 regulatory control period.
The RIT-T is an economic cost–benefit analysis that is used by transmission businesses to assess and rank different electricity investment options. The RIT-T is a requirement for transmission investments over $6 million.
ElectraNet published the Project Assessment Conclusions Report (PACR) for the SAET RIT-T on 13 February 2019. The preferred option identified in the PACR involves constructing a new 330 kV interconnector between Robertstown in South Australia and Wagga Wagga in New South Wales. It also includes a 220 kV spur from Buronga in NSW to Red Cliffs in Victoria. The estimated cost is $1.53 billion with a completion date of 2022 to 2024.
On 5 June 2019, the AER commenced its preferred option assessment process for SAET RIT-T following a written request from ElectraNet that the AER make a determination on whether the preferred option identified in the SAET RIT-T satisfies the RIT-T.
Under clause 5.16.6 of the NER, the AER has no more than 120 business days to make and publish a determination, subject to requests for further information. Accordingly, we published our determination ahead of the statutory deadline of March 2020.
Our role in the preferred option assessment process is to assess the transmission business’s compliance with the RIT‒T and NER rather than to undertake a full merits review. Where instances of non-compliance are identified, the AER may, as part of its determination, direct the RIT-T proponent to amend its final report to ensure the RIT-T is applied in accordance with the requirements of the NER.