AER accepts application to convert Basslink to regulated service

The Australian Energy Regulator (AER) has today announced its final decision to accept the application from APA Group to convert the Basslink transmission cable to a regulated transmission service.

In making the final decision, the AER was guided by the National Electricity Objective (NEO). The AER determined that converting Basslink is more likely to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers. A fully regulated Basslink will ensure that the interconnector operates as an open link, enabling the market and consumers to benefit from generation in both the Tasmanian and mainland regions of the National Electricity Market. 

AER Chair Clare Savage said the decision was informed by extensive consultation and engagement with stakeholders, as well as market modelling and analysis on the likely impact of conversion on the energy market and consumers.

“The final decision to accept the application comes after further consultation and receiving information and evidence that indicated conversion to a regulated service would be in the long-term interests of consumers. 

“A converted Basslink will support benefits to consumers by ensuring the open flow of electricity across the Bass Strait,” Ms Savage said.

Since making a draft decision in December 2024 to reject the application, the AER received stakeholder submissions, expert advice as well as information provided in response to compulsory information notices issued to APA and Hydro Tasmania. Based on this, the AER undertook further analysis. 

Scenarios on the timing and size of the proposed Marinus Link interconnector and how Basslink would be operated if it were not converted were considered as part of both the final and draft decisions. 

“The change between draft and final decisions reflects the finely balanced nature of the decision and further analysis of the benefits of conversion against different scenarios. 

“When we released our draft determination, we highlighted the need for the AER to very carefully weigh the benefits from a range of potential outcomes and potential future states against the cost and risks for consumers,” Ms Savage said. 

Having made the decision to convert the service, the AER will now consult on the revenue Basslink would be entitled to earn as a regulated transmission service. 

A paper setting out the proposed process and timeline for a revenue determination has been released for consultation alongside the final decision. 

Subject to stakeholder views, under the proposed revised timeline the AER intends to publish a draft revenue determination for consultation in September 2025, before finalising that determination in February 2026. This timetable would enable Basslink to become a regulated service on 1 July 2026. If Basslink does not reclassify its registration with AEMO before 1 July 2026, the final conversion decision will lapse and Basslink will remain an unregulated market network service provider.

Notes to Editors

Basslink is a 500 MW undersea transmission cable that links Loy Yang in Victoria to George Town in Tasmania. It was built in 2006 and acquired by APA Group in October 2022. Basslink is currently the only electricity interconnector between Victoria and Tasmania.

On 19 May 2023, Basslink submitted an application to the AER to convert its network services from market network services (unregulated) to prescribed transmission services (regulated). The AER assessed the application under rule 11.6.20 of the National Energy Rules, guided by the National Electricity Objective.

The application has undergone multiple rounds of consultation, including an issues paper in November 2023 and a consultation paper in August 2024.

A draft decision was released in December 2024 and further consultation was undertaken.