The Murraylink interconnector will get a major infrastructure improvement after the Australian Energy Regulator’s final revenue determination for the next five years.
The interconnector between South Australia and Victoria will have $25.3 million to invest in replacing an aging control system during the 2018-23 regulatory period.
AER board member Jim Cox said that the interconnector – a key link in the National Energy Market – would be able to make the necessary upgrades in a prudent and efficient manner.
“In making this decision, the AER has been mindful of Murraylink’ s need to upgrade its control system in order to ensure secure supply of electricity to consumers. But it is consumers who ultimately foot the bill for such spending.
“The AER has determined that Murraylink can make this important infrastructure improvement in a way that minimises the cost impact on households and businesses while still providing for safe and secure energy supply to South Australians,” said Mr. Cox.
The AER’s determination allows Murraylink to recover $81.4 million from consumers through network charges over the 2018-23 regulatory period, a reduction of 15.5 per cent ($14.9 million) from Murraylink’ s original proposal.
The AER’s decision sets the allowed rate of return at 5.7 per cent per cent for 2018-19, compared to Murraylink’ s proposed 6.54 per cent.
“Murraylink sought a rate of return that was higher than the going rate in the current investment environment. This determination will mean Murraylink will seek lower financing costs which will ensure more efficient investment,” said Mr. Cox.