APA Group (ASX:APA) said that the Australian Energy Regulator has released a draft decision rejecting the conversion of Basslink into a regulated Transmission Network Service Provider.
The decision follows APA's application in September 2023, which aimed to transition Basslink from a contracted Market Network Service Provider.
APA's commitment during its 2022 acquisition included converting Basslink into a regulated asset under a consultation process with the Tasmanian Government.
Modelling by ACIL Allen for the AER showed that, in most scenarios, regulation would provide an average economic benefit of $1.6 billion to consumers from 2025 to 2050.
APA Group's CEO and Managing Director, Adam Watson, commented, "Our application to convert Basslink to a regulated asset was progressed following consultation with key stakeholders during the acquisition process.
As part of the sale transaction, we also entered into a network services agreement with Hydro Tasmania to ensure the asset could operate safely and reliably during the AER consultation process."
If the draft decision becomes final, APA plans to trade Basslink as a non-contracted MNSP, in alignment with market rules.
The current contract with Hydro Tasmania is set to end on June 30, 2025 after which APA will commence operations accordingly.
Further consultation and submissions from APA and stakeholders will inform the AER's final decision.
APA Group will continue engaging with the AER and will provide updates in line with its disclosure obligations.