The Australian Energy Regulator (AER) has today published its decision on TasNetworks’ contingent project application for its North West Transmission Developments (NWTD) stage 1 early works. NWTD is one of two components of Project Marinus, a project that has identified by AEMO as an actionable project in the ISP optimal development path.
Following consultation, the AER’s decision is to approve the proposed capital expenditure of $167.3 million ($2024–25) for TasNetworks’ to undertake early works to facilitate the delivery of stage 1 of NWTD. We have assessed that TasNetworks’ proposed incremental capital expenditure for these early works is prudent and efficient. We also determined that all trigger events for this contingent project application have been met and the project costs exceeds the materiality threshold.
The stage 1 early works costs approved by the AER will be added to TasNetworks’ total maximum allowed revenue for the 2024–29 period. This will be reflected in customer bills from 2025–26 onwards, with an estimated increase of $5 per annum in residential electricity bills in Tasmania over 2025-26 to 2028-29.
In support of its CPA lodged on 10 October 2024, TasNetworks submits that undertaking early works will enable it to:
- determine the project delivery cost with a high degree of accuracy. In this way, customers know with more certainty the expected cost of investing in the NWTD
- progress activities on the critical path to deliver Stage 1 to meet AEMO’s June 2030 delivery date
- undertake work to reduce uncertainty, and identify, manage and reduce construction, cost and delivery risks to keep the NWTD on track and its cost as low as possible.
Given these benefits from early work activities identified by TasNetworks, we would expect significant detail and more defined costs as these early works funding will enable TasNetworks to refine its project costs and identify and address risks, thereby reducing the overall uncertainty associated with the project.
TasNetworks is currently progressing a concessional finance agreement with the Clean Energy Finance Corporation. The concessional finance arrangement is expected to include funding for the costs associated with the Stage 1 early works and include a sharing arrangement with consumers. When a concessional finance arrangement is agreed, TasNetworks intends to request the AER to amend its revenue in accordance with the concessional finance agreement.
The AER expects to receive a second contingent project application from TasNetworks seeking approval of the construction phase in late 2025. This would include an updated RIT-T analysis which incorporates AEMO’s July 2025 Inputs, Assumptions and Scenarios Report.
Background
The NWTD is a component of Project Marinus, a single actionable project under AEMO’s 2024 Integrated System Plan. The NWTD involves significant upgrades to the existing high voltage alternating current 220 kV transmission network in north-west Tasmania. These upgrades are to facilitate the connection and operation of the Marinus Link interconnector between Tasmania and Victoria.
A contingent project application outlines the amount of revenue a network business seeks to recover from its customers to deliver a project. The AER’s role is to assess whether the trigger event for an actionable Integrated System Plan project has been satisfied and to review the reasonableness of the proposed costs of the project.
We have also released an Issues Paper on Marinus Link Pty Ltd's stage 1 construction costs proposal for the Marinus Link interconnector. Stakeholders are invited to provide submissions on the construction costs proposal and our Issues Paper by 18 April 2025.