On 27 November 2020, TransGrid submitted a contingent project application to the AER seeking an increase in its allowed revenue to increase the transfer capacity of the existing Victoria – New South Wales interconnector (VNI minor).
VNI minor is a joint TransGrid and Australian Energy Market Operator (AEMO) project, which involves increasing the transfer capacity of the existing interconnector between Victoria to NSW by approximately 170 MW during peak demand conditions in NSW.
VNI minor comprises of three key elements:
- installation of a second 500/330 kilovolt (kV) transformer at South Morang Terminal Station
- re-tensioning the 330 kV South Morang – Dederang transmission lines, as well as associated works (including replacement of series capacitors), to allow operation at thermal rating, and
- installation of modular power flow controllers (MPFC) on the 330 kV Upper Tumut – Canberra and Upper Tumut – Yass lines to balance power flows and increase transfer capability.
This project was recommended in the 2018 ISP and identified as an actionable ISP project in the 2020 ISP. In February 2020, AEMO and TransGrid jointly completed a RIT-T to assess the technical and economic viability of this project to alleviate power transfer capacity limitations between Victoria and New South Wales.
On 26 October 2020, TransGrid sought written confirmation from AEMO that the VNI Minor project satisfies the requirements under the feedback loop. In conducting the assessment for the purposes of the feedback loop, AEMO is required to confirm that:
- the preferred option identified in the RIT-T addresses the relevant identified need specified in the most recent ISP and aligns with the optimal development path referred to in the most recent ISP; and
- the cost of the preferred option does not change the status of the actionable ISP project as part of the optimal development path as updated in accordance with clause 5.22.15 of the NER where applicable.
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 TransGrid'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 most efficiently into the future, and the incremental revenue that TransGrid may recover within the 2018–23 regulatory control period as a result of undertaking the project.
Invitation for submissions
The AER invites written submissions on TransGrid's contingent project application by close of business 21 December 2020.