The Australian Energy Regulator (AER) has approved the conversion of Basslink into a Transmission Network Service Provider (TNSP), overturning its previous draft decision to reject the application. This change allows the Basslink interconnector to participate in the electricity spot market.
APA Group submitted its application to the AER in May 2023 to transition Basslink from a contracted Market Network Service Provider (MNSP) to a regulated asset. Initially, in December 2024, the AER released a draft determination rejecting the application, prompting a period for stakeholder feedback. Following extensive consultation and analysis of market data, the AER announced its final decision to approve the conversion, emphasizing that it aligns with the National Electricity Objective (NEO). The AER concluded that this conversion supports efficient investment in electricity services, benefiting consumers in the long term.
APA Group anticipates that Basslink will function as a regulated asset starting July 2026. However, in the meantime, the company plans to trade Basslink in the electricity spot market beginning July 1, 2025, after the existing contract with Hydro Tasmania expires on June 30, 2025.
This regulatory conversion was part of an agreement between APA and the Tasmanian Government during the acquisition process in 2022, which required APA to seek to operate Basslink as a regulated asset. Additionally, APA entered a network services agreement with Hydro Tasmania, ensuring the interconnector’s safe and reliable operation during the AER’s consultation.
The AER stated that a fully regulated Basslink would act as an open link, enabling greater market access and allowing consumers to benefit from electricity generation in both Tasmanian and mainland regions within the National Electricity Market (NEM).
AER Chair Clare Savage noted that the decision involved careful consideration of stakeholder input, expert advice, and the potential impacts of both the conversion and the absence of conversion on the energy market and consumers. The AER evaluated various scenarios, including the timing and capacity of the proposed Marinus Link interconnector, to assess Basslink’s operational strategies.
The shift from the draft to the final decision reflects a balanced consideration of the potential advantages of conversion against various market scenarios. “We needed to carefully evaluate the trade-offs between benefits and risks for consumers,” Savage explained.
With the decision made, the AER will now consult on the revenue Basslink will be allowed to earn as a regulated transmission service. A consultation paper detailing the proposed process and timeline for revenue determination has been released, with public feedback accepted until July 11, 2025.
