Transgrid, the privatised NSW transmission operator sold by the state in 2015, runs as a regulated monopoly delivering stable, low-risk profits under set revenue rules. The company has asked the Australian Energy Regulator to lift approved costs for the NSW share of EnergyConnect, a 900km interconnector linking South Australia, NSW and Victoria, to $3.2bn.
Its application argues external conditions drove a major cost overrun on the project, and it is seeking permission to recover those overruns from electricity users across the state.
EnergyConnect is pitched as crucial infrastructure for moving renewable energy between states, so its budget blowout carries weight for both investors and households. Transgrid frames the higher costs as unavoidable and outside its control, positioning the increase as consistent with the regulatory framework.
AGL Energy tells the regulator that Transgrid is reshaping the story to suit its own interests. The dispute centres on who should shoulder construction risk when regulated networks expand into large, capital-intensive projects.
AGL Energy has lodged a strongly worded submission urging the Australian Energy Regulator to reject Transgrid’s reopener application. Its argument is that construction and delivery risk belongs with Transgrid’s owners, not with households already facing higher bills.
Consumer advocates often agree that regulated network businesses earn safe returns precisely because they are supposed to absorb such risks. The battle over this $3.2bn cost envelope is shaping up as a test case for how far networks can push regulators to socialise project overruns across the energy transition.
