Project EnergyConnect (PEC) is the high voltage interconnector being constructed between South Australia and New South Wales. Transgrid is responsible for the NSW portion of the project which is 95% complete. With a $1.1 billion cost blowout over and above what was approved in their 2023-2028 revenue determination, Transgrid are applying to the Australian Energy Regulator (AER) to pass these costs on to consumersunder a ‘Reopener rule’ which was never intended for this purpose.
That’s why our response to the Transgrid’s Reopener Application for Project EnergyConnect (PEC) recommends the AER reject Transgrid’s application. The Reopener Rule only allows the AER to reopen a revenue determination for proposed future capital expenditure, not prior spending (including cost overruns).
Our submission details multiple reasons why the AER should not approve Transgrid’s request. There are appropriate mechanisms in the rules to deal with cost overruns. They are structured to ensure robust regulatory oversight and avoid unreasonable and inefficient extra costs to consumers.
It also explains how approving this request would subvert the intent of the rules and result in consumers bearing all the cost of project mismanagement.
What’s next?
The AER will decide the outcome of Transgrid’s application in the coming months. We will closely follow this process and continue with work to ensure that robust regulation of transmission projects protects the consumer interest.
