Today Dr Kerry Schott AO, Chair of the Energy Security Board, submitted a rule request to streamline the regulatory approval process for a new high capacity electricity interconnector between South Australia and New South Wales.

The interconnector has been identified as a priority project in the Australian Energy Market Operator’s integrated system plan, published in 2018. This plan forecasts where and when network investment needs to happen to support the large amount of new generation connecting to the grid in the coming years. 

The plan states the new interconnector - subject to the necessary approvals being received - would be built by the mid-2020s enabling connection of large amounts of renewable energy and improving resilience for South Australia. The proponent of the new link, ElectraNet, published a cost-benefit assessment (known as a regulatory investment test for transmission or RIT-T) for the project on 13 February 2019. 

To streamline the assessment process, Dr Schott proposes amending the National Electricity Rules to reduce the time between the completion of the cost-benefit analysis (the RIT-T) undertaken by ElectraNet and when the Australian Energy Regulator (AER) makes its determination on whether ElectraNet can recover the cost of the project.

The rule request does not remove any steps in the regulatory process. It saves time by allowing the AER to start its assessment of how much revenue can be recovered at the same time as it considers whether the proposed project is the best option for consumers. The AER would not be able to finalise the revenue recovery decision until it had made a determination on the proposed project. According to the request, running these steps concurrently could save up to six months, provided ElectraNet gives the AER any extra information it requests in a timely manner.

The RIT-T dispute process, which must be completed before the AER can start its assessment, would remain unchanged. Under the dispute process, stakeholders have 30 days to lodge a dispute notice about a RIT-T if they have concerns about how a transmission business has applied the test or its cost-benefit calculations. 

The AEMC plans to initiate this rule change next week. The changes proposed by Dr Schott are closely related to those being considered by the AEMC as part of the early implementation of ISP priority projects rule change

For more information contact Elizabeth Bowron, Senior Advisor, Security and Reliability, on (02) 8296 0619.

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817 

Background on AEMO’s Integrated System Plan

AEMO’s Integrated System Plan, published in July 2018, sets out where and when network investment needs to happen to support the large amount of new generation connecting to the grid in the coming years. 

The COAG Energy Council asked the Energy Security Board to work with the market bodies - the AEMC, AEMO and Australian Energy Regulator - to make the Integrated System Plan “actionable”. 

As part of the process, the AEMC published a final report in December 2018 that sets out the regulatory changes needed to deliver the Integrated System Plan in the required timeframe – and at the least cost.

The AEMC’s report was developed in consultation with stakeholders and underpins the Energy Security Board’s vision for making the Integrated System Plan actionable.