AER approves cost recovery for the Eyre Peninsula project to improve electricity supply

South Australia’s Eyre Peninsula will soon see greater electricity reliability and fewer outages as ElectraNet’s reinforcement project receives final regulatory approval from the Australian Energy Regulator (AER). 

AER Chair Clare Savage said the regulator has approved ElectraNet’s application to replace the existing transmission line supplying the Eyre Peninsula, allowing them to recover efficient costs of the project from consumers.

"The project will enable ElectraNet to replace an ageing asset and improve both the reliability and security of supply to homes and businesses.

"It's consumers who ultimately pay for projects such as this, and it's the AER's job to make sure consumers pay no more than necessary. 

"Our decision will allow ElectraNet to deliver this important project and recover efficient project costs of $280 million from its consumers, over the life of the asset.

“While this will add $1 going forward to the average residential bill, South Australian consumers will benefit from enhanced network reliability and capacity into the future.

“Replacing the existing transmission line supplying the Eyre Peninsula will also eliminate the backup generation costs currently being paid by consumers to secure supply to the area," Ms Savage said.

ElectraNet initially requested $290 million to complete this project. The AER's decision has reduced this by $10 million to reflect the assessment of efficient costs. The approved $280 million includes $74 million that was previously allocated to repair the line.

In April 2019, the AER determined that the Eyre Peninsula reinforcement project satisfies the requirements of the Regulatory Investment Test for Transmission (RIT-T).

The RIT-T is a cost-benefit analysis that transmission businesses apply before making network investments in excess of $6 million and the AER’s role is to determine the efficient costs for the investment.

The amount of revenue approved by the AER through a contingent project application is then added to the network businesses’ five-year revenue determination to allow the costs to be recovered from consumers.

The Eyre Peninsula reinforcement project is set to be completed by December 2022.

About the AER

The Australian Energy Regulator (AER) works to make all Australian energy consumers better off, now and in the future. 

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.
  • We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.
Issued date: 
28 September 2020
AER reference: 
NR 32/20
General enquiries - Contingent projects