The Australian Energy Regulator (AER) has a role in making revenue determinations for Network Operators who are authorised or directed to undertake network infrastructure projects. We are undertaking this role as Regulator under the NSW Electricity Infrastructure Investment Act 2020 (EII Act).
On 14 October 2022, the NSW Minister for Energy directed Transgrid (as the Network Operator) to carry out the Waratah Super Battery (WSB) project, which is classified as a Priority Transmission Infrastructure Project (PTIP) under the EII Act.
The aim of the WSB project is to increase power transfer capacity on transmission lines that connect generation in the northern and southern regions of NSW to load centres in the Sydney/Newcastle/Wollongong region. The battery will operate as part of a broader System Integrity Protection Scheme (SIPS). The SIPS is designed to monitor transmission lines and enable the battery to act as a 'shock absorber' in the event of any sudden fault on the transmission system. The WSB project comprises the following four elements:
- SIPS battery service (contestable)
- Paired generation services (contestable)
- SIPS control system (non-contestable)
- Network augmentations (non-contestable)
Non-contestable revenue proposal
On 30 June 2023, we received a revenue proposal from Transgrid for the non‑contestable components (network augmentations and SIPS control system) of the WSB project. The revenue proposal set out a schedule of quarterly payments that are proposed to be paid to Transgrid as the Network Operator for the non-contestable components of the WSB project.
The AER held a public forum on Transgrid's revenue proposal on 18 July 2023. Stakeholders were invited to make submissions on Transgrid's revenue proposal by 25 July 2023. Two late submissions were received.
On 29 September 2023, we published our draft decision on the revenue that Transgrid can recover in the 2024–29 regulatory control period. On 2 November 2023, Transgrid submitted its revised revenue proposal.
Stakeholders were invited to make submissions on our draft decision and Transgrid's revised proposal by 24 November 2023. Three submissions were received.
On 15 December 2023, we published our final decision. This decision sets out the amounts to be paid to Transgrid for the non-contestable components of the WSB project. These amounts are based upon our assessment of the prudent, efficient, and reasonable costs for the project. We have assessed these costs using a modified version of Chapter 6A of the National Electricity Rules and other requirements as described in the EII Regulations.
Determination review and remake – June 2024
On 19 June 2024 the AER released its reviewed and remade determination on the costs of the non-contestable components of the WSB project for the 2024–29 regulatory period. This is because a material error was identified in our December 2023 determination, which was the omission of an adjustment mechanism to carry out the AER’s intention to update the return on equity if required. The remade decision includes an additional adjustment mechanism to update the return on equity.