Electricity Interconnector

Mr PEDERICK (Hammond) (14:50): My question is to the Minister for Energy and Mining. Can the minister update the house on the progress of the South Australia-New South Wales interconnector and the benefits the project will have on the state's energy system?

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (14:51): Thank you very much to the member for Hammond for his question. Yes, there has been significant progress recently, since parliament last sat.

Members would know that the interconnector is one of several key planks to our energy policy to make sure that South Australians receive more affordable, more reliable and cleaner electricity. There has not been a new interconnector built in South Australia for approximately 20 years, and one of the reasons for that is that there hasn't been an interconnector proposal that has passed the RIT-T process for approximately 20 years, the regulatory investment test for transmission which the Australian Energy Regulator (AER) requires any proposal to meet.

The AER receives an enormous amount of information from the proponents. In this case, technically the proponent is ElectraNet, the South Australian transmission company, doing that on behalf of ElectraNet and TransGrid, which is the New South Wales transmission company, for the interconnector between South Australia and New South Wales. ElectraNet put in their mid-range case with regard to benefits to the state, which was very attractive. The AER assessed it as thoroughly as they possibly could. They took an enormous amount of submissions, did an enormous amount of work and essentially stress tested it to the max.

They did everything they possibly could to provide as robust and thorough a test to this project as possible, and happily it passed the test. Happily, the Australian Energy Regulator has approved the proposal that has been put forward to it by ElectraNet. Even under the toughest conditions they say that this will be good for both South Australia and New South Wales. Of course, there is still work to be done. There is still now what is called the contingent project application, which is the last step required, where the proponent—in this case, on behalf of both transmission companies—puts forward their final costings to build this interconnector.

So we are not over the line yet. There is an enormous amount of work still to be done, but we have developed this project further than any other project that the Australian energy market has progressed for about 20 years—so it is very good news. It's good news because this will help deliver cheaper, more reliable and more affordable electricity for South Australians.

It is often said by those opposite that all this will be is an extension cord to New South Wales. While at times of course we will be very pleased to import cheaper electricity from New South Wales, we will export renewable energy, clean energy, from South Australia into New South Wales far more often than we will import their electricity. However, the reality is that these things don't work if it's not good for both states. These things don't work if there isn't going to be two-way traffic. So, of course, we are going to have both, but we will export far more into New South Wales than we will import.

Interestingly at the moment, as members may know, the Heywood interconnector is down because of some difficulties in Victoria. This only highlights in even greater clarity why we need this new additional interconnector between South Australia and New South Wales. We have interconnection already with Victoria. We are very grateful to have it. It is an enormous help to South Australia, but the interconnector to New South Wales will be even more help. It will be more interconnection with another state, another market—spread the risk, grow the benefits.