AER issues decision on TransGrid revenues

The Australian Energy Regulator has today issued its decision on the amount that TransGrid can recover from NSW and ACT customers over the 2018-23 regulatory period.

The decision allows TransGrid to recover $4015.1 million from its customers in the 2018-23 regulatory control period. This largely holds TransGrid’s approved revenue over the next five years to the level approved for the previous four year period.

AER Chair Paula Conboy said that ensuring consumers pay no more than they should for the poles and wires that deliver electricity to their homes and businesses is the central principle of this determination.

“At a time when energy affordability is a key concern for all households, the AER has worked with TransGrid and a wide range of stakeholders to make a determination that focuses on the efficient use of consumer’s money.

“We have taken TransGrid’s proposals and rigorously tested them to determine efficient spending – spending that will ultimately be recovered from consumers.

“We’ve involved those consumers in the process as much as possible to help ensure that their money is spent where it is actually needed,” said Ms Conboy.

The forecast cost of the Powering Sydney’s Future project is included in the determination, meaning efficient spending by TransGrid can deliver reliable ongoing electricity supply to the Sydney CBD and immediate surrounds.

Ms Conboy said that TransGrid had proposed other significant transmission projects but had not provided sufficient information to justify their approval.

“The need for these projects – and thus their associated costs – have not been made certain enough for us to approve them as part of this decision. Consumers should not have to fund projects that are not properly justified,” she said.

The AER developed consumer and stakeholder engagement forums and opportunities throughout the determination process, a model that will be repeated in another network revenue decisions.

“The AER is focused on working with all stakeholders to deliver improved network regulation determinations. We are keen to understand and incorporate the priorities of all affected stakeholders, especially consumers, when making these important decisions,” said Ms Conboy.

Contingent projects

TransGrid identified a nine network augmentation projects that may be reasonably required to be undertaken within the 2018-23 regulatory period but whose need and associated costs are not sufficiently certain. Consequently, expenditure for such projects does not form a part of the AER’s assessment of the total forecast capex that is approved in this decision.

If, during the regulatory control period, TransGrid considers that certain conditions (or “triggers”) eventuate, then it may make application to the AER to recover the costs of any of the given projects. At that time, the AER will conduct a formal review.

The contingent projects are:

  1. New South Wales to South Australia Interconnector ($276m to $1074m)
  2. Reinforcement of Southern Network ($60m to $393m)
  3. Reinforcement of Northern Network (QNI upgrade) ($63m to $141m)
  4. Support South Western NSW for Renewables ($89m to $477m)
  5. Supply to Broken Hill ($52m to $177m)
  6. Reinforcement of Southern Network in response to Snowy 2.0 ($831m to $1,228m)
  7. Support Central Western NSW for Renewables ($120m to $455m)
  8. Support North Western NSW for Renewables ($500m to $945m)
  9. Renewables development in the Mt Piper to Wellington area ($36.8m)
Issued date: 
18 May 2018
AER reference: 
NR 12/18
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