On 17 January 2020, TransGrid submitted an application to the AER seeking an increase in its allowed revenue to expand the transmission transfer capacity between New South Wales (NSW) and Queensland. TransGrid's contingent project application relates to the QNI minor upgrade project identified in the Australian Energy Market Operator's 2018 Integrated System Plan (ISP) and draft 2020 ISP, published on 12 December 2019.
We will assess TransGrid's contingent project application in parallel with our determination on whether the preferred network investment option for expanding the transfer capacity between NSW and Queensland (the QNI minor upgrade project) satisfies the Regulatory Investment Test for Transmission (RIT-T).
We will determine the prudent and efficient capital and operating costs required to undertake the QNI minor upgrade project, and the incremental revenue that TransGrid may recover within the 2018-23 regulatory control period as a result of undertaking the project. The contingent project assessment will determine whether TransGrid's proposed capital expenditure of $223 million represents the efficient and prudent costs required to deliver the project. The QNI minor upgrade project involves:
- uprating the Liddell to Tamworth 330 kV lines; and
- installing new dynamic reactive support at Tamworth and Dumaresq, and shunt capacitor banks at Tamworth, Armidale and Dumaresq.
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.