AER approves costs for Victoria to New South Wales Interconnector

The Australian Energy Regulator (AER) has approved costs to upgrade the Victoria-New South Wales Interconnector (VNI Minor) that will help secure electricity supply to homes and businesses after Liddell power station’s closure in August 2023.

The Australian Energy Market Operator’s (AEMO) 2020 Integrated System Plan (ISP) identified VNI Minor as a project required to address cost, security and reliability issues in the National Energy Market.

AER Chair Clare Savage said, “VNI Minor was proposed by AEMO in their role as the national planner responsible for identifying new transmission needs to support the energy system’s transition.

“In our role, we’ve assessed TransGrid’s proposed costs and determined that they are reasonable. The AER has approved $45 million that is needed to deliver the project.

“The project will increase transmission capacity between New South Wales and Victoria and provide consumers with secure and reliable energy supplies.”

VNI Minor is the first ‘actionable project’ to progress under new rules governing the ISP and the AER’s decision is the final stage in the regulatory process.

The new rules require the AER to assess the prudency and efficiency of the costs of delivering the option found to offer the highest net market benefits in AEMO’s ISP.

The AER’s decision amends TransGrid’s existing 2018-23 revenue determination to account for the costs of delivering the project.  

Average residential customers in New South Wales will pay an estimated extra $1 on their bills in 2022-23 as a result of this decision.

About the AER

The 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: 
13 April 2021
AER reference: 
NR 08/21
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