The Australian Energy Regulator (AER) has determined that ElectraNet’s preferred investment option to upgrade the electricity transmission network on the Eyre Peninsula satisfies the requirements of the Regulatory Investment Test for Transmission (RIT-T).
The Eyre Peninsula transmission network requires investment in the coming years due to the age and condition of the existing transmission line from Cultana to Port Lincoln, which was first established in 1967.
Our current revenue determination for ElectraNet included an allowance for replacement works on sections of the existing 132 kV transmission line serving the Eyre Peninsula, and for ongoing network support generation to meet reliability obligations at Port Lincoln. However, we also recognised that ElectraNet was exploring alternatives that may deliver greater net benefits for customers, including full line replacement options.
Through its Eyre Peninsula Electricity Supply Options RIT-T process, ElectraNet explored a range of options to provide an efficient and reliable supply to the Eyre Peninsula into the future. ElectraNet’s preferred option is:
- a new double-circuit line from Cultana to Yadnarie initially energised at 132 kV, but which has the option to be energised at 275 kV if required in the future; and
- a new 132 kV double-circuit line from Yadnarie to Port Lincoln.
We have determined that the preferred option identified by ElectraNet through its RIT-T process maximises net economic benefits, and therefore satisfies the RIT-T. The RIT-T is an economic cost–benefit analysis used to select the investment option that meets the needs of the network while providing the maximum net economic benefits to the market.
The estimated capital cost of the proposed investment is approximately $240 million. ElectraNet considers that it can deliver the project by the end of 2021, subject to receiving necessary statutory approvals. ElectraNet expects that the cost of the new transmission line will be offset by avoiding the cost of repairing the existing line and current network support generation costs, resulting in a neutral price impact for an average residential electricity customer in South Australia.
This determination means ElectraNet may apply to the AER to recover the costs of the Eyre Peninsula network upgrade in charges during the 2018–23 regulatory period. At that stage, we will assess the costs of the proposed investment in greater detail, and determine the efficient capital and operating costs attributable to the project.