More Renewable rorts.
“Cost estimates for Australia’s largest energy transmission project have blown out by $1.5 billion, sparking fears the hike will be passed onto consumers.”
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In estimates I asked the Energy department about the cost base for calculating regulated rate of return on transmission lines.
Surprising enough they couldn’t even tell me what the rate of return was.
For those of you that aren’t aware, transmission lines are guaranteed a rate of return by the government based on their cost. The energy company can pass on transmission costs to consumers at a certain rate.
This is why energy companies love renewables because they require more transmission lines which generate more profits at a cost to the consumer and industry.
I asked if the cost of transmission lines includes the current blow out of $1.5 billion on a transmission line between South Australia and New South Wales.
Needless to say I couldn’t get a straight answer but you can be sure that the energy companies won’t be the loser here.
The two major parties will make sure of that.
Quote from:
https://amp.abc.net.au/article/104983108
Environment and Communications Legislation Committee
24/02/2025
Estimates
CLIMATE CHANGE, ENERGY, THE ENVIRONMENT AND WATER PORTFOLIO
Department of Climate Change, Energy, the Environment and Water
Senator RENNICK: My next question relates to a report in last week’s Australian Financial Review about blowout in building a transmission line of about $1½ billion. Going back to that regulated rate of return issue with transmission lines, is regulated rate of return based on final cost, including the blowout or the initial estimated cost?
Mr Duggan : I might go to the specifics of this particular project that was commented on and then I’ll ask one of my colleagues to talk about how that translates to the regulated asset base. That was an announcement by Transgrid where their component of Project EnergyConnect had increased from 2.1 to 3.6 billion. As we understand it, Transgrid has yet to confirm with the AER the process to assess whether the increase in costs meets the efficient and prudent test for them to be counted in the regulatory asset base. Until it goes through that process, what of that $1.5 billion increase will go through to consumers is yet to be determined.
Senator RENNICK: So you do have checks and balances in that regulatory process that, if it gets them, they’re not going to get eight per cent of the blowout.
Mr Duggan : They need to show that the increase in expenditure is deemed to be efficient and prudent. They need to satisfy the AER of that, that’s correct.
Senator RENNICK: Just to confirm: is the regulated rate of return less than eight per cent? Is it eight per cent or is it six per cent? What is the regulated rate of return?
Mr Duggan : I will defer to one of my colleagues on that.
Mr Johnson : I can’t tell you the exact figure, Senator. The AER sets every four years what it calls the Rate of Return Instrument. This sets out the methodology by which the rate of return on equity and debt is determined during that four-year period. That binds the AER’s decisions. It’s influenced by movements in the capital markets during the period. At the time they set it two years ago, I think that the figure was something between six and seven per cent; but it would have moved with movements in capital markets.
Senator RENNICK: A final question: do you track how much foreign immigration, how much foreign labour is involved in building these transmission lines?
Mr Duggan : No, we don’t track that information.
Senator RENNICK: You have got no idea. I’ll go back to Home Affairs on that.
Mr Duggan : I think anything relating to immigration is best directed to Home Affairs.
Senator RENNICK: Thanks very much.
