The Australian Competition and Consumer Commission today approved the conversion of the Murraylink interconnector to a regulated interconnector.
ACCC Commissioner Mr John Martin said the ACCC had determined there are substantial benefits in Murraylink operating as a regulated interconnector.
“For example, it should ensure a constant transfer of power from Victoria to South Australia, providing South Australian customers with access to lower cost electricity from Victoria and New South Wales," he said.
In reaching its decision, the ACCC applied a cost-benefit analysis, to determine both the benefits of the interconnector to electricity consumers and producers and the most efficient way of building the interconnector.
“This approach takes into account the needs of the market and ensures consistency with the process used by other transmission businesses in the National Electricity Market for assessing new interconnector investments,” said Mr Martin.
The ACCC set revenues for the Murraylink interconnector some 50 per cent below those sought by the interconnector owner.
Revenues were capped for a ten year period ranging from $8.9 million in 2003/04 to $12.72 million in 2012/13. The revenue cap is based on a post-tax nominal return on equity of 11.44 per cent and an opening asset balance of $97.33 million.
This is in line with the regulatory principles outlined in the National Electricity Code and the ACCC’s Draft Principles for the Regulation of Transmission Revenues.
"The ACCC believes this decision sends appropriate signals to the market. While the ACCC will only provide returns to transmission businesses on efficient investment decisions, those decisions, particularly those based on the regulatory test, are unlikely to face the same sort of optimisation risk at future revenue resets," said Mr Martin.
Further information:
Mr John Martin, Commissioner, (02) 6243 1130
Mr Joe Dimasi, Executive General Manager, (03) 9290 1814
Ms Janet Millar, Acting Director, Public Relations, (02) 6243 1108