Australian regulator blocks Transgrid's request to shift billion-dollar cost to consumers

In a preliminary ruling, the Australian Energy Regulator rejected Transgrid's application to recoup more than a billion dollars of additional expenses incurred on its portion of Project Energy Connect, a $3.6 billion transmission line linking South Australia and New South Wales. The regulator concluded that Transgrid had not demonstrated that the cost blowout was unforeseeable or that a delay would materially harm the transmission system’s security.

Consumer groups praised the move, arguing it prevents utilities from shifting avoidable risks onto households for decades. While ElectraNet completed its share of the project on budget, Transgrid’s costs have risen from an initial $1.9 billion to over $3 billion after setbacks including a failed contract with Clough and Elecnor, flooding, COVID-19 and high inflation. The AER left open the possibility for Transgrid to seek recovery in its next five-year revenue deal starting in 2028. A Transgrid spokesperson said the company respects the regulator’s independence and will consider the feedback, emphasizing the project's long-term benefits for consumers.