The Australian Energy Regulator (AER) has released a draft decision not to convert Basslink into a regulated Transmission Network Service Provider (TNSP).
Basslink is currently the sole electricity interconnector between Victoria and Tasmania. The interconnector is 370km long and includes 290km of subsea power cable, enabling two-way power transmission between both states.
The system is not currently subject to economic regulation, but has a revenue contract in place with Hydro Tasmania until 30 June 2025.
APA made a commitment during the 2022 acquisition process to seek to convert Basslink to a regulated TNSP asset under an agreed consultation process with the Tasmanian Government. This process began in September 2023.
According to APA, the consumer benefits modelling undertaken by ACIL Allen on behalf of the AER found, in 10 of the 12 scenarios considered, that regulation of Basslink provided an average economic benefit to consumers of $1.6 billion for the period 2025 to 2050, compared to the counterfactual scenario of trading electricity as a non-contracted MNSP.
If the final decision confirms the draft decision, APA will progress its plan to trade Basslink as a non-contracted MNSP. APA already has the systems in place to bid the asset, as required under the current Hydro Tasmania contract.
“Our application to convert Basslink to a regulated asset was progressed following consultation with key stakeholders during the acquisition process,” APA Group CEO and managing director Adam Watson said.
“The AER’s assessment of our regulatory proposal highlighted consumer benefits of regulation was on average $1.6 billion compared to the counterfactual.
“APA is seeking to regulate Basslink in line with its commitment to the Tasmanian Government. If today’s draft decision by the AER is confirmed as final, APA will seek to maximise the value of the asset, in the best interest of APA’s investors, by progressing our plans to trade Basslink capacity in the spot market.”
The AER’s draft decision is preliminary with further consultation and submissions to be received from APA and other stakeholders. The AER must then consider those submissions before issuing a final decision.
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