Transgrid, the privatised NSW transmission operator sold by the state in 2015, runs a regulated monopoly where revenues and returns are set by the Australian Energy Regulator. The company has asked the regulator to lift the allowed total cost of the NSW portion of project EnergyConnect to $3.2bn.
EnergyConnect is the 900km high-voltage interconnector designed to link South Australia with NSW and Victoria and support more renewable energy. Transgrid argues that external factors outside its control have driven the cost surge and justify reopening the approved budget.
AGL Energy, one of the country’s biggest gentailers and a major user of the transmission network, has lodged a strongly worded submission opposing the move. Its filing urges the Australian Energy Regulator to refuse Transgrid’s application and to keep the financial burden of overruns on Transgrid’s shareholders.
AGL says those investors are the ones who stand to benefit from the company’s expansion and regulated returns. The submission accuses Transgrid of relying on a contrived interpretation of the regulatory framework to justify shifting risks onto consumers.
AGL also argues that Transgrid is misapplying the rules that govern when cost allowances can be revisited.
