On 24 October 2024, the Australian Energy Regulator (AER) received a revenue proposal from ACEREZ Partnership (ACEREZ), who was selected by the Energy Corporation of NSW (EnergyCo) as the network operator for the main Central-West Orana Renewable Energy Zone (CWO REZ) network project.
Under the NSW Electricity Infrastructure Investment Act 2020 (EII Act), the AER is required to make revenue determinations for network operators who are authorised or directed to undertake network infrastructure projects. The scope and timing of the CWO REZ network project is decided by EnergyCo as the Infrastructure Planner.
ACEREZ’s revenue proposal seeks approval to recover the total amount payable for the project established through three competitive assessment processes carried out by EnergyCo. The revenue proposal also sets out a schedule of quarterly payments to be paid to ACEREZ and mechanisms to adjust the amount payable over the project term.
As the revenue proposal was submitted under the contestable framework, the AER has 42 business days from the date of submission to make a revenue determination. Our role is to assess whether the competitive assessment processes were genuine and appropriate, and if so, we must rely on and adopt the outcomes in our revenue determination.
On 13 December 2024, the AER made a revenue determination for the project. We must consult with EnergyCo prior to publishing the determination. This process is currently underway. The AER may decide not to publish part of a revenue determination if it is not appropriate, taking into account criteria in the Electricity Infrastructure Investment Regulation 2021.
Once that process is finalised, the AER will publish a public version of the revenue determination on our website, including the amounts payable to ACEREZ for the first 5 years of the project term and the mechanisms by which amounts payable may be adjusted over the project term. We expect to publish the determination in early 2025.
Background
The CWO REZ is approximately 20,000 square kilometres and is located in central NSW and centred by Dubbo and Dunedoo. It is the first REZ to be developed under the NSW Government’s Electricity Infrastructure Roadmap. The CWO REZ is designed to initially deliver 4.5 gigawatts (GW) of network capacity and support up to 8.8 GW of generation. Completion of the network project within the CWO REZ will be staged between April 2028 and April 2030, with foundation generation projects commencing operations progressively from November 2028 to April 2030.
The CWO REZ was declared by the NSW Minister for Energy and Environment under section 19(1) of the EII Act in November 2021.
The CWO REZ network project comprises:
- the network infrastructure within the CWO REZ to connect new renewable generation and storage projects to the existing NSW transmission network at Wollar. This is referred to as the Main CWO REZ network project.
- upgrades to the existing NSW transmission network to transfer energy from the CWO REZ to major load centres in NSW. This is referred to as the Enabling CWO REZ network project. It will be undertaken by Transgrid and will be subject to a separate non‑contestable revenue determination.
On 4 June 2024, AEMO Services Limited (the NSW Consumer Trustee) under s. 31(1)(b) of the EII Act authorised ACEREZ as the network operator to develop, construct, own, control and operate the main CWO REZ network project. ACEREZ is a consortium comprising Cobra, Acciona and Endeavour Energy.
We have made our determination in accordance with the EII Act, the EII Regulation and our Revenue determination guideline for NSW contestable network projects.
Under the EII Act, ACEREZ is required to be paid by the Scheme Financial Vehicle (SFV) in accordance with our determination. The SFV recovers these costs (and other NSW Roadmap costs) from NSW electricity distributors, who in turn recover these costs from NSW electricity customers via their retail bills.