After extensive consultation, the Australian Energy Regulator (AER) has released a draft decision to reject the application from APA Group to convert its services from a market network service to a prescribed transmission service.
The AER invites stakeholders to provide submissions on this draft decision, with the consultation period open until 31 January 2025.
Our draft decision presents our assessment as to whether conversion is likely to support the achievement of the National Electricity Objective. In doing so we have considered the potential outcomes of conversion in a range of potential future states and counterfactual scenarios.
The development of additional interconnector capacity across Bass Strait (the Marinus Link project), the timing of delivery of this capacity, and the way Basslink is operated and dispatched should it remain a market network service all have a significant bearing on future outcomes.
While the draft decision is finely balanced, the uncertainty of benefits in different future scenarios compared to the certainty of cost and risk transfer to consumers means that converting Basslink to a prescribed transmission service is unlikely to support the National Electricity Objective at this time.
Our position has been informed by submissions from stakeholders who offered contrasting views about the benefits of converting Basslink and about what was likely to happen in the future. These stakeholder views informed our analysis but also underlined the uncertainty surrounding the likely benefits.
If the final decision diverges from the draft and supports conversion, the AER would need to consult on the revenue Basslink would be entitled to earn as a regulated transmission service.
Background
Basslink is a 500 MW undersea transmission cable which links Loy Yang in Victoria to George Town in Tasmania. It was built in 2006 and was subsequently acquired by APA Group in October 2022. Basslink is currently the only electricity interconnector between Victoria and Tasmania.
On 19 May 2023, Basslink submitted an application to the AER to convert its network services from market network services (unregulated) to prescribed transmission services (regulated). This application also sought the determination of a transmission revenue process for Basslink. The AER assessed the application under rule 6A.9 of the National Energy Rules, guided by the National Electricity Objective.
The application has undergone multiple rounds of consultation, including an Issues Paper in November 2023 and a Consultation Paper in August 2024.
Next Steps
The AER encourages all interested stakeholders to participate in this consultation process. Submissions on the draft decision are open until 31 January 2025. Further details and documentation are available on the AER’s website.