The Australian Energy Regulator (AER) has approved costs for HumeLink early works stage 1 part 2 following Transgrid’s contingent project application.
Transgrid applied for a contingent project application on 23 May 2023. A contingent project application outlines the amount of revenue an energy business seeks to recover from its customers to deliver a project. The AER’s role is to assess whether the trigger event for actionable Integrated System Plan (ISP) projects has been satisfied and to review the reasonableness of the proposed costs of the project.
The AER has approved Transgrid’s cost of $227.9 million (2022–23) in forecast capex for the procurement of long lead equipment. Transgrid’s stage 1 part 2 application will bring the associated cost forward to stage 1 and reduce its stage 2 forecast capex by an equivalent amount. This is its second ‘early works’ contingent project application which includes purchase of transformers, reactors, conductor and steel as part of early works activities.
The stage 1 part 2 project costs approved by the AER will be added to Transgrid’s total maximum allowed revenue for the 2023–28 regulatory control period. This will be reflected in customer bills from 2024–25 onwards, with an estimated slight increase in household electricity bills in NSW over 2024–25 to 2027–28 of around $1.10 per annum (total $3.70 per annum for stage 1).
Following the approvals of stage 1 activities, the AER expects to receive a contingent project application from Transgrid seeking approval of the construction phase (stage 2) of the HumeLink project before the end of 2023.
Background
HumeLink is included in the Australian Energy Market Operator (AEMO) 2022 ISP optimal development path as a ‘staged actionable project’. The 2022 ISP provides a comprehensive roadmap for the National Electricity Market for supplying affordable and reliable electricity to homes and businesses while supporting Australia’s net zero ambitions.
More information about the HumeLink project is available here.