AER approval moves vital project closer to completion

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An upgrade of the Queensland to New South Wales (NSW) Interconnector, increasing the transmission capacity between the two states, has advanced following the decision by the Australian Energy Regulator (AER) to approve the Regulatory Investment Test for Transmission (RIT-T).

The AER, which has fast tracked this process, has approved the Regulatory Investment Test–Transmission (RIT-T) for the proposed $230 million upgrade of the Queensland-New South Wales Interconnector.

AER chair Clare Savage said, “The Liddell power station is scheduled to close in 2023, which will reduce the generation capacity in NSW. The proposed interconnector upgrade will allow more electricity to be exported from Queensland to New South Wales avoiding the need for costly new generation.

“The RIT-T is a cost benefit assessment of the proposed interconnector. 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.

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“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.

“We’re saying that the assessment by TransGrid and Powerlink stacks up and that consumers will get value for money from this investment.

“The proposed interconnector will help to address potential system security problems and alleviate upward pressure on wholesale electricity prices,” Ms Savage said.

The AER has fast tracked its consideration to support the timely completion of this significant project. TransGrid expects that construction of the project will start immediately in March 2020, with delivery and completion of internetwork testing expected by June 2022.

TransGrid has separately applied to the AER to amend its existing revenue determination to recover the efficient costs of delivering the project. The AER will make a separate determination on this element in April 2020.

The project is expected to add an extra 60 cents to the transmission component of annual customer bills in New South Wales.

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