Regulator Rejects APA Bid to Regulate Basslink Cable

The Australian Energy Regulator (AER) has issued a draft decision rejecting APA Group’s proposal to convert the troubled Basslink undersea cable into a regulated transmission asset, citing insufficient benefits for consumers compared to the costs and risks involved.

Basslink, a 500MW interconnector linking Tasmania and Victoria, ran into financial trouble after a prolonged outage in 2015 caused by undersea cable failure. This outage occurred during a critical period when Tasmania faced depleted hydroelectricity reserves and limited gas generation, leading to significant power disruptions.

APA Group, which acquired Basslink in 2022, hoped to convert it into a regulated Transmission Network Service Provider (TNSP) as part of its commitment to the Tasmanian Government. APA argued that regulation would deliver economic benefits of up to $1.6 billion across 10 of 12 scenarios modeled for the period 2025-2050.

However, the AER found that these benefits were uncertain and did not justify the certain costs and risks that would be passed on to consumers.

“If today’s draft decision is confirmed as final, APA will seek to maximize the value of the asset by trading Basslink capacity in the spot market after the Hydro Tasmania contract expires on June 30, 2025,” APA Group CEO Adam Watson stated.

The AER emphasized that the decision is preliminary and open to further consultation, with APA and stakeholders invited to provide additional submissions before a final ruling.

Meanwhile, attention is shifting to Marinus Link, a proposed 750MW undersea interconnector across Bass Strait. Co-funded by the federal and Tasmanian governments, Marinus Link recently received approval for $196.5 million in early planning and design works.

Despite its importance to Tasmania’s “Battery of the Nation” project, concerns remain over Marinus Link’s financial viability and its long-term cost impact on Tasmanian consumers.

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The AER’s decision reflects the delicate balance between economic benefits and consumer impact as Australia advances its energy network goals.