The Australian Energy Regulator (AER) has today released a draft determination on Transgrid’s proposed network augmentations and System Integrity Protection Scheme control system for the Waratah Super Battery project.
Our draft determination would allow Transgrid to recover $104.1 million ($ nominal) over the 2024-29 regulatory period. This is a $33.6 million ($ nominal) reduction to its proposal.
We applied a thorough and rigorous assessment process to Transgrid’s revenue proposal in line with the requirements of the Electricity Infrastructure Investment Act 2020, the Electricity Infrastructure Investment Regulation 2021, and our guidelines, to ensure NSW consumers pay no more than necessary for the services they consume.
The AER is now consulting on our draft determination to provide an opportunity for interested stakeholders to comment on the positions we have adopted. Submissions on the draft determination close on 24 November 2023.
The AER expects to make a final determination in December 2023.
Background
The Electricity Infrastructure Roadmap (the Roadmap) is the NSW Government’s plan to transform its electricity system by coordinating investment in transmission, generation, storage and firming infrastructure as coal-fired generation plants retire. The Roadmap is enabled by the NSW Electricity Infrastructure Investment (EII) Act 2020.
The NSW Government appointed the AER as a regulator under the EII Act in 2021. As part of this role, the AER must make five-year revenue determinations for Network Operators authorised by the independent Consumer Trustee, or authorised or directed by the Minister, to undertake a network infrastructure project. We have made this current determination under the non-contestable arrangements in the EII framework and our Revenue Determination Guideline for non-contestable network Projects.
The Waratah Super Battery is the first project directed under the EII Act and comprises the following four elements:
- SIPS battery service (contestable)
- Paired generation services (contestable)
- SIPS control system (non-contestable)
- Network augmentations (non-contestable)
Under the EII Act, the Scheme Financial Vehicle must pay the Network Operator in accordance with the amounts set out in this revenue determination. The Scheme Financial Vehicle recovers the cost of the NSW Roadmap from NSW electricity distributors, who in turn recover those costs from NSW electricity consumers via network charges in their retail bills. The amounts the Scheme Financial Vehicle recovers from NSW electricity distributors are set out in the annual contribution determination we make under section 56 of the EII Act, the next of which the AER will make in February 2024.
The AER made its revenue decision for the SIPS battery service (contestable) component in December 2023.
On 14 October 2022, the NSW Minister for Energy directed Transgrid to be the Network Operator to carry out the Waratah Super Battery project, which is classified as a Priority Transmission Infrastructure Project under the EII framework.
On 30 June 2023, Transgrid submitted a revenue proposal for the non-contestable components of the Waratah Super Battery project. Consistent with the Minister’s direction the proposal relates to the undertaking of specified network augmentations and the development and implementation of a System Integrity Protection Scheme.