Ausgrid obtains regulatory waiver to start on Hunter REZ transmission project

Another hurdle to building out the Hunter-Central Coast renewable energy zone (REZ) has been crossed, after the Australian Energy Regulator (AER) green-lit a waiver allowing Ausgrid to get started on transmission upgrades.

The waiver allows Ausgrid to provide network services in the REZ alongside its existing services without separating staff, offices and branding. 

The Hunter zone, unlike others in New South Wales (NSW) and in other areas in Australia with REZ plans, is being planned around existing infrastructure.

Other zones require huge new infrastructure investments to connect far-flung projects to existing transmission lines, such as the transmission corridor to link the New England REZ with the Hunter zone which is now on its third iteration. 

Ausgrid is allowed to use existing easements to upgrade its network and allow the zone to host another 1 gigawatt (GW) of capacity, in order to speed up development of the REZ.

The Hunter Central Coast REZ.

Planning approval for Ausgrid came through relatively quickly in September, but it had to also get AER approval because renewable energy zones fall outside the normal laws governing network companies. 

“Ausgrid applied for a waiver because HCC REZ network services will fall outside of the definition of ‘direct control services’,” the AER says. 

“Despite Ausgrid being a monopoly provider of the HCC REZ network services, the services will be deemed to be ‘contestable electricity services’… Without a waiver, Ausgrid would be required to separate their staff, offices and branding to deliver these services.”

That kind of duplication would negate any efficiency benefits created by letting Ausgrid handle the REZ, the network company said in its AER application in July. 

“Granting our proposed waiver would not result in a cost or risk to consumers because the HCC REZ network services are non-contestable. Consequently, there is no risk of discrimination or of customer choice being influenced by Ausgrid’s use of DNSP branding or cross-promotion,” Ausgrid said. 

The Hunter REZ stretches from the Upper Hunter in the north to the Central Coast in the south and includes the Newcastle, Lake Macquarie and Port Stephens regions.

To handle the 1 GW of new generation in the REZ, Ausgrid will need to do a number of upgrades to existing distribution lines, such as replacing wooden poles with bigger and stronger metal poles, and build two new substations.

The waiver lasts until June 30, 2035.

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