HumeLink Regulatory Investment Test

PIAC responded to TransGrid’s consultation as part of the Regulatory Infrastructure Test for Transmission (RIT-T) for the project to reinforce the NSW Southern Shared Network or ‘HumeLink’.

PIAC considers it essential that the risk of new transmission investment be properly allocated between industry and consumers. We consider that risk should be borne by those best placed to manage it and that it is therefore not appropriate for consumers to bear this investment risk in full.

PIAC considers costs of investment should be recovered according to who benefits. Where there are multiple beneficiaries’ costs should be recovered proportionally to their share of the benefits. Where it is not possible to identify beneficiaries, a causer-pays principle should be used.

PIAC stipulates that HumeLink should only proceed if its benefits to consumers are greater than its costs, and material costs imposed on HumeLink to enable Snowy 2’s access to the energy market are recovered directly from Snowy.

Furthermore, we recommend that TransGrid:

• examine options for addressing imbalances between where benefits accrue and costs are allocated.
• provides clarity on how it plans to incorporate developments in other related planning processes into the market modelling and options selection of the HumeLink RIT-T
• uses the experience gained through conducting the HumeLink RIT-T to inform broader policy and regulatory reforms such as the ESB’s Actioning the ISP workstream and the AEMC’s COGATI review