AER approves costs for Project EnergyConnect

The Australian Energy Regulator (AER) has determined the costs for Project EnergyConnect, the AER's final regulatory approval for the South Australia (SA) to New South Wales (NSW) interconnector to be built by ElectraNet and TransGrid.

AER Chair Clare Savage said the regulator’s rigorous assessment of the electricity line connecting SA to NSW, with an added connection to North-West Victoria, has helped to ensure consumers pay no more than is needed to build the interconnector.

As a result, project costs have been reduced by $88 million from what was originally proposed, which will reduce the bill impact for consumers.

“Project EnergyConnect is identified by the Australian Energy Market Operator as a required project under the 2020 Integrated System Plan, a national roadmap for Australia’s eastern energy market,” Ms Savage said.

“It is consumers who ultimately pay for big energy infrastructure projects like this, so the AER’s job is to ensure that the project costs are efficient.

“We have undertaken a thorough assessment of the proposed costs, including input from technical experts and public consultation, and our decision is that the total cost for Project EnergyConnect is $2.28 billion, a 4 per cent reduction from the $2.36 billion initially proposed by TransGrid and ElectraNet.

“While consumers will pay for Project EnergyConnect over the life of the asset, in the short term this will increase annual bills by $6 for SA households and $11 for NSW households in the financial year 2022–2023, and by $17 for SA households and $22 for NSW households each year during the 2023–2028 period.

“However, the project is expected to provide benefits to consumers over the long term by allowing for additional renewables and low cost generation, while improving security and diversity of supply for energy users in SA and NSW.”

Networks are able to apply to recover additional revenue from consumers to construct significant infrastructure such as an interconnector. When this happens the AER is required by the National Electricity Rules to assess a contingent project application from the network business and make a decision on the efficient costs for the project.

The AER’s decision today approves the final and efficient costs for Project EnergyConnect following contingent project applications from ElectraNet and TransGrid.

Find out more by visiting Project EnergyConnect - contingent project.

Table 1: Annual household bill impact
  Bill impact (2022–23 financial year) Bill impact (2023–2028 period)
South Australia $6 $17 per annum
New South Wales $11  $22 per annum
Table 2: Project EnergyConnect proposed project costs and AER decision
  Initial contingent project applications - September 2020 AER preliminary position - December 2020 Revised contingent project applications - April 2021 AER final determination - May 2021
ElectraNet $468.6 m $456.8 m $464.3 m $457.4 m
TransGrid $1894.6 m $1695.7 m $1866.3 m  $1817.9 m
Total Project EnergyConnect $2363.2 m $2152.5 $2330.6 m $2275.3 m
Issued date: 
31 May 2021
AER reference: 
NR 15/21
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