AER approves investment in QNI expansion project

Supporting New South Wales businesses and households to avoid energy bill increases due to the closure of Liddell is one of the reasons the Australian Energy Regulator (AER) has approved the final element of the Queensland – New South Wales Interconnector (QNI) regulatory process.

The AER has determined that TransGrid can recover the efficient costs of upgrading the QNI from customers.

The AER estimates TransGrid will incur $218 million in capital costs to deliver the project.

AER Chair Clare Savage said, “Consumers will get value for money from this investment, including wholesale market cost savings.”

The AER’s decision allows TransGrid to recover an additional $28.2 million from customers over 2021-22 and 2022-23 to account for the costs of delivering this project. This is slightly lower than the $30.3 million proposed by TransGrid, due to the AER’s assessment of the cost of overheads for the project. 

This will increase annual transmission charges by 1.7 per cent per year in 2021-22 and 2022-23. This is an indicative increase of $2 per year in residential electricity bills in New South Wales.

The AER has fast tracked its consideration to support the timely completion of this significant project. Early works on the project have already commenced, with delivery and completion of inter-network testing expected by June 2022.

Ms Savage said the timely completion of regulatory processes is a significant factor in the success of major infrastructure projects.

“Our job is to assess projects and make sure they represent the long term interests of consumers. It is also important that we do so in a thorough and efficient manner.

“We made our determination on the Regulatory Investment Test – Transmission element less than a month ago and our determination today ends the AER’s involvement in the process.”

The AER approved the Regulatory Investment Test – Transmission phase of the project in March. The RIT-T is a cost benefit assessment of the proposed interconnector expansion.

“We tested the reasonableness of TransGrid and Powerlink’s inputs and assumptions across a range of scenarios and found that the project is robust and will deliver a net economic benefit to Australian energy consumers,” Ms Savage said.

“The investment is expected to deliver $170 million in net benefits to consumers and producers of electricity and to support the ongoing energy market transition. The cumulative benefits are expected to exceed the investment cost within seven years.”

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.
Sector: 
Segment: 
Issued date: 
28 April 2020
AER reference: 
NR 13/20
Contact: 
AER Media 0466 409 921 media@aer.gov.au