The Australian Energy Regulator (AER) has granted final regulatory approval for ElectraNet’s Eyre Peninsula reinforcement project in South Australia, to improve electricity reliability and reduce outages.

AER Chair, Clare Savage, said the regulator has approved ElectraNet’s application to replace the existing transmission line supplying the Eyre Peninsula, allowing them to recover efficient costs of the project from consumers.

“The project will enable ElectraNet to replace an ageing asset and improve both the reliability and security of supply to homes and businesses,” Ms Savage said.

“It’s consumers who ultimately pay for projects such as this, and it’s the AER’s job to make sure consumers pay no more than necessary. 

“Our decision will allow ElectraNet to deliver this important project and recover efficient project costs of $280 million from its consumers, over the life of the asset.

“While this will add $1 going forward to the average residential bill, South Australian consumers will benefit from enhanced network reliability and capacity into the future.

“Replacing the existing transmission line supplying the Eyre Peninsula will also eliminate the backup generation costs currently being paid by consumers to secure supply to the area.”

ElectraNet initially requested $290 million to complete this project. The AER’s decision has reduced this by $10 million to reflect the assessment of efficient costs. The approved $280 million includes $74 million that was previously allocated to repair the line.

In April 2019, the AER determined that the Eyre Peninsula reinforcement project satisfies the requirements of the Regulatory Investment Test for Transmission (RIT-T).

The RIT-T is a cost-benefit analysis that transmission businesses apply before making network investments in excess of $6 million and the AER’s role is to determine the efficient costs for the investment.

The amount of revenue approved by the AER through a contingent project application is then added to the network businesses’ five-year revenue determination to allow the costs to be recovered from consumers.

The Eyre Peninsula reinforcement project is set to be completed by December 2022.

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