MOORABOOL AND CENTRAL HIGHLANDS POWER ALLIANCE INCORPORATED vs MINISTER FOR ENERGY AND RESOURCES
[2023] VSC 774
•20 December 2023
IN THE SUPREME COURT OF VICTORIA
Not Restricted
AT MELBOURNE
Common Law Division
Judicial Review and Appeals List
S ECI 2023 01635
MOORABOOL AND CENTRAL HIGHLANDS POWER ALLIANCE INCORPORATED
Plaintiff
v
MINISTER FOR ENERGY AND RESOURCES
Defendant
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JUDGE:
McDonald J
WHERE HELD:
Melbourne
DATE OF HEARING:
7-8, 11-12 September 2023
DATE OF JUDGMENT:
20 December 2023
CASE MAY BE CITED AS:
Moorabool and Central Highlands Power Alliance v Minister for Energy and Resources
MEDIUM NEUTRAL CITATION:
[2023] VSC 774
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JUDICIAL REVIEW – Standing – Where Minister’s orders rendered extant proceeding futile - Whether plaintiff has standing to bring new proceeding challenging Minister’s orders – Whether plaintiff required to establish its standing in earlier proceeding in order to establish standing in later proceeding – Consideration of Boerkamp v The Honourable Matthew Guy (2014) 202 LGERA 17 – Where Minister’s orders disapplied provisions of National Electricity Rules (‘NER’) conferring procedural rights to have submissions considered – Whether plaintiff has standing to sue to protect those procedural rights – Standing established.
JUDICIAL REVIEW – Standing – Where plaintiff seeks to quash two orders made by the defendant pursuant to s 16Y of the National Electricity (Victoria) Act 2005 (‘NEVA’) that modify or disapply provisions of the National Electricity Law (‘NEL’) and NER – Whether plaintiff had special interest in the subject matter of the proceeding – Where plaintiff’s objects and activities were concerned with stopping or undergrounding proposed transmission infrastructure projects – Where quashing of orders will not stop or cause undergrounding of proposed transmission infrastructure projects – Plaintiff unable to establish sufficient nexus between subject matter of the proceeding and its objects and activities.
JUDICIAL REVIEW – Adequacy of reasons – Whether provision of adequate reasons a jurisdictional precondition to exercise of power – Adequate reasons not a precondition to exercise of power - Whether reasons are incorporated into record by operation of s 10 of the Administrative Law Act 1978 (‘ALA’) – Order under s 16Y of the NEVA not a ‘decision’ for purposes of s 2 of the ALA – Whether reasons are incorporated into record as matter of fact – Reasons not incorporated in fact.
JUDICIAL REVIEW – Adequacy of reasons – Standard of reasons required where power discretionary – Where standard of reasons required reasons to provide a measure of transparency – Reasons adequate – NEVA s 16ZB.
JUDICIAL REVIEW – Unreasonableness – Whether Minister’s process of reasoning irrational – Whether reasons accompanying orders disclosed illogicality – No illogicality established.
JUDICIAL REVIEW – Jurisdictional error – Whether Minister had power to require Australian Energy Market Operator (‘AEMO’) to direct statutory body in NSW to publish a report – Order within the Minister’s power – Whether s 16Y(1) of the NEVA permitted Minister to make an order requiring AEMO to select option for proposed transmission project – Order within power.
DELEGATED LEGISLATION – Inconsistency with law of Parliament – Where Minister’s Orders disapply rules 5.15A and 5.16A of the NER – Whether disapplication of rules 5.15A and 5.16A of the NER inconsistent with r 5.22 of the NER – No inconsistency between obligations – Where legislation provides for supremacy of delegated legislation – NEVA s 16Y(4), 16ZC(1), (3).
JUDICIAL REVIEW – Improper purpose – Whether Minister substantially actuated by improper purposes in making orders – Where permissible purposes include making of an order to expedite transmission projects – Where inference of improper purpose equally consistent with inference of lawful purpose – No improper purpose established.
JUDICIAL REVIEW – Jurisdictional error – Whether Minister failed to ‘specify’ an augmentation for purposes of s 16Y(1)(a) of the NEVA – Meaning of word ‘specify’ – Relevance of context in statutory interpretation – Where narrow construction would defeat purpose of provision.
DELEGATED LEGISLATION – Whether delegated legislation void for uncertainty – Whether enacting legislation imposes condition of certainty – Where standard of certainty inconsistent with statutory language and scheme – Plaintiff unable to establish nexus between alleged uncertainties and statutory requirement of certainty.
WORDS AND PHRASES CONSIDERED – ‘specify’ – ‘according to its tenor’ – ‘decision’ – ‘as a consequence of’.
National Electricity (Victoria) Act 2005 – ss 12A, 16Y, 16Z, 16ZA, 16ZB, 16ZC, 16ZG, 30, 31, 32; Administrative Law Act 1978 – ss 2, 10; National Electricity Law – ss 7, 49, 50C, 50F; National Electricity Rules – rr 5.10, 5.15, 5.16, 5.15A, 5.16A, 5.16B, 5.22, ch 10.
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APPEARANCES:
Counsel
Solicitors
For the Plaintiff
Mr N Wood SC with Mr C Viney and Ms E Nadon
Thomson Geer Lawyers
For the Defendant
Mr D Batt KC with Ms F Batten, Mr A Petridis and Mr J Blaker
Victorian Government Solicitor’s Office
HIS HONOUR:
Introduction
1 The statutory scheme governing the national energy market is very complex. The scheme is the product of the National Energy Market Agreement, an agreement entered into by the Commonwealth, State and Territory Governments. The energy market is regulated by legislation passed at state level. Schedule 1 of the National Electricity (South Australia) Act 1996 (SA) contains the National Electricity Law (‘NEL’). The NEL, and any regulations made thereunder, apply in Victoria by reason of ss 6 & 7 of the National Electricity (Victoria) Act 2005 (‘NEVA’).
2 There is corresponding legislation in New South Wales – the National Electricity (New South Wales) Act 1997 (NSW) (‘NENA’) – which also applies the NEL as if it were a law of the New South Wales Parliament. The NEL provides for the making of delegated legislation called the National Electricity Rules (‘NER’). The NER applies in Victoria pursuant to s 9 of the NEL.
3 Any proposal for the expansion of Victoria’s electricity transmission system is subject to regulatory requirements and processes contained in the NEL and NER. This includes a requirement to undertake a cost benefit analysis called the Regulatory Investment Test for Transmission (‘RIT-T’) and a requirement to undertake competitive tender processes. These regulatory requirements have the potential to delay projects designed to increase transmission capacity. Division 7 of Part 3 of the NEVA confers powers on the Minister for Energy and Resources (‘Minister’) to disapply or modify provisions of the NEL and NER which would otherwise apply to a proposed expansion of Victoria’s transmission system.
4 On 20 February 2023 and 27 May 2023 the Minister made orders under Division 7 of Part 3 disapplying and modifying various provisions of the NEL and NER in respect of two substantial transmission projects: the Western Renewables Link (‘WRL’) and the Victoria New South Wales Interconnector West (‘VNI West’) (the ‘February Order and ‘May Order’, together, the ‘Orders’). The WRL project involves the construction of 500kV transmission lines running westward from Sydenham to Bulgana. The VNI West project involves the construction of transmission lines connecting with the WRL project at Bulgana which then run northeast via Kerang and cross the Murray River to connect with a substation at Dinawan in NSW. The cost of the preferred option for the WRL project is $370 million. The cost of the preferred option for the VNI West project is $3.499 billion.
5 The plaintiff in this proceeding, the Moorabool and Central Highlands Power Alliance Incorporated (‘Alliance’) was incorporated on 30 July 2020. The Alliance has 2350 members comprising landowners and businesses located along the proposed routes for the WRL and VNI West projects. Since its incorporation, the Alliance has co-ordinated a ‘Stop AusNet’s Towers’ campaign. It has consistently advocated for the proposed transmission lines to be placed underground.
6 The Alliance seeks orders in the nature of certiorari quashing the February Order and the May Order. The Minister challenges the standing of the Alliance to seek this relief. The Alliance sought to establish its standing on two bases. First, that its legal interests were adversely affected by the Orders. Second, that it has a special interest in the subject matter of the proceeding by reason of its objects, activities and representation of 2,350 landowners, residents and businesses who will be affected by the WRL and VNI West projects.
7 As to the impact on its legal interests, the Alliance identified three legal interests. First, its legal interest arising from a ‘procedural right’ to have submissions which it made to AEMO and Transgrid in September 2022 ‘lawfully considered in the preparation of a VNI West PACR done in accordance with the ordinary RIT-T criteria’. Second, its legal interest in proceedings which it commenced on 23 December 2022 by way of originating motion against AEMO seeking judicial review of a decision by AEMO not to reapply the RIT-T to the WRL project (‘AEMO proceeding’). Third, its legal interest constituted by a procedural right to have a dispute notice which it served on AER on 26 June 2023 with respect to VNI West, determined by AER in accordance with r 5.16B of the NER.
8 I have rejected the Alliance’s submission that it has standing based on its interest relating to the AEMO proceeding or its right to have a dispute notice which it served on the AER determined in accordance with r 5.16B of the NER. I have upheld the Alliance’s claim that it has standing arising from a procedural right, as an interested party, to have submissions which it made to AEMO and Transgrid in September 2022 considered in accordance with rules 5.16A.4(f)-(j) of the NER. Those rights were extinguished as a consequence of the Orders. I have rejected the alternative basis upon which the Alliance claims that it has standing, said to arise by reason of the Alliance’s objects and activities.
9 As to the grounds upon which the Alliance challenges the validity of the Orders, I have concluded as follows:
(a) Grounds 1 and 8 challenge the Orders on the ground that the reasons accompanying the Orders are inadequate. I have dismissed these grounds for the following reasons. First, assuming in the Alliance’s favour that the Minister’s reasons were inadequate, a failure to provide adequate reasons does not constitute jurisdictional error. Second, if the reasons were inadequate this does not constitute an error of law on the face of the record. The reasons were not incorporated into the Orders by s 10 of the Administrative Law Act 1978. Further, the reasons were not in fact incorporated into the Orders. Third, I have, in any event, concluded that the Minister’s reasons were adequate.
(b) Grounds 2 and 9 challenge the Orders on the grounds of legal unreasonableness. The Alliance submits that the Minister’s reasons do not disclose a rational basis for disapplying s 50F(2) of the NEL which requires AEMO to undertake a cost benefit analysis. The Alliance also contends that the inclusion of cl 6.1(f) in the February Order is illogical as it duplicates a power which AEMO already had under r 5.22.6(d)(i) of the NER. I have rejected both of these contentions. I have concluded that the Minister’s reasons disclose a rational basis for disapplying s 50F(2) of the NEL and for including cl 6.1(f) in the February Order.
(c) Ground 6 alleges that the May Order is invalid because the Minister had no power to require AEMO and Transgrid to adopt the VNI West Project Assessment Conclusions Report (‘VNI West PACR’) which selected option 5A as the preferred option. The Alliance submits that the Minister did not have power to require Transgrid to assess option 5A as the preferred option in accordance with the NER as applied by the NENA. I reject this submission. It was within Transgrid’s power to elect not to publish the VNI West PACR with AEMO. The fact that Transgrid agreed to jointly publish a PACR with AEMO does not support a finding that it acted under dictation from the Minister. The Alliance also submitted that the Minister did not have power to require AEMO to select option 5A as the preferred option for the VNI West project. I reject this submission. The Minister has power under ss 16Y(1)(i) and (2)(c) of the NEVA to require AEMO to select option 5A as the preferred option.
(d) Ground 10 Alleges that the decision to publish the February Order and the decision to publish the May Order are affected by jurisdictional error. The Alliance submits that the disapplication of the RIT-T process in respect of the VNI West project is inconsistent with AEMO’s obligations under r 5.22 of the NER. I have concluded that there is no conflict between the Orders and r 5.22. However, even if there is a conflict, by virtue of ss 16Y(4), 16ZC(1) and (3) of the NEVA, to the extent that there is any inconsistency, the Orders prevail over r 5.22.
(e) Ground 7 alleges that the May Order is invalid because the Minister acted with two improper purposes. First, to curtail the options which Transgrid could identify as credible options for VNI West. Second, to dictate the outcome of a PACR to be published by Transgrid with AEMO in accordance with the NER as applied by the NENA. I reject this submission. There is no factual basis to support a finding that the Minister acted with either improper purpose alleged by the Alliance.
(f) Ground 3 alleges that the Minister failed to exercise the power conferred by s 16Y of the NEVA because the February and May Orders inadequately specify the augmentations which are subject to the Orders. I reject this submission. The augmentations which are subject to the Orders were identified with sufficient specificity to constitute a valid exercise of power.
(g) Ground 4 alleges that the February Order is invalid by reason of uncertainty. In particular, the Alliance submits the cl 6.1(a) is invalid because it fails to prescribe any standard by reference to which the assessment of alternative options to preferred options described in the VNI West PADR and the WRL PACR is to be undertaken. I reject this submission. Section 16Y(2)(d) conferred power on the Minister to include cl 6.1(a) in the February Order. Section 16Y(2)(d) does not impose a standard of certainty which, if not complied with, renders an order under s 16Y(1) invalid.
10 I have concluded that the Alliance has standing to bring the present proceeding. However, I have rejected all of the grounds on which it challenges the validity of the Orders. The Alliance’s application will be dismissed.
Australian Energy Market
11 In order to address the competing submissions of the Alliance and the Minister in respect of the Alliance’s standing and the grounds upon which the Alliance challenges the validity of the Orders it is necessary to address in detail the key aspects of the legislative scheme regulating the Australian energy market.
12 The Australian Energy Market Operator (‘AEMO’) is a public company limited by guarantee created in 2009 pursuant to an agreement of the Council of Australian Governments. AEMO’s principal function is the regulation of the National Electricity Market (‘NEM’). The NEM is the power network that connects Queensland, NSW, the ACT, Victoria, Tasmania and South Australia. AEMO also operates retail and wholesale gas markets across these states.
13 Alongside its operational responsibilities in respect of the NEM and gas markets, AEMO also acts as the National Transmission Planner (‘NTP’). In this role, AEMO is tasked with national strategic development and coordination of the national transmission grid.
AEMO’s powers under the National Energy Law
14 The NEL confers extensive statutory functions on AEMO. AEMO’s general statutory functions are prescribed by s 49(1) of the NEL:
(1) The following functions are conferred on AEMO:
(a) to operate and administer the wholesale exchange;
(b) to promote the development and improve the effectiveness of the operation and administration of the wholesale exchange;
(c) to register persons as Registered participants;
(d) to exempt certain persons from being registered as Registered participants;
(e) to maintain and improve power system security;
(f) to facilitate retail customer transfer, metering and retail competition;
(fa) any functions of a data holder under the Competition and Consumer Act 2010 of the Commonwealth for CDR data relating to a designated energy sector;
(g) for an adoptive jurisdiction—the additional advisory functions or declared network functions (as the case requires);
(h) any functions conferred by jurisdictional electricity legislation or an application Act;
(i) any other functions conferred under this Law or the Rules.
15 Section 49(2) sets out AEMO’s functions as the NTP:
(2) In its role as National Transmission Planner, AEMO has the following functions:
(a) to prepare, maintain and publish a plan for the development of the national transmission grid (the National Transmission Network Development Plan) in accordance with the Rules;
(b) to establish and maintain a database of information relevant to planning the development of the national transmission grid and to make the database available to the public;
(c) to keep the national transmission grid under review and provide advice on the development of the grid or projects that could affect the grid;
(d) to provide a national strategic perspective for transmission planning and coordination;
(e) any other functions conferred on AEMO under this Law or the Rules in its capacity as National Transmission Planner.
16 Importantly, s 49(3) states that ‘AEMO must, in carrying out functions referred to in this section, have regard to the national electricity objective’. The national electricity objective (‘NEO’) is set out in s 7 of the NEL:
7—National electricity objective
The objective of this Law is to promote efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity with respect to—
(a) price, quality, safety, reliability and security of supply of electricity; and
(b) the reliability, safety and security of the national electricity system.
Development of Integrated System Plans
17 In developing the national transmission grid, AEMO will review current electrical transmission needs and develop an Integrated System Plan (‘ISP’). AEMO is required by r 5.22.1 of the NER to produce an ISP every two years. The purpose of an ISP is:
to establish a whole of system plan for the efficient development of the power system that achieves power system needs for a planning horizon of at least 20 years for the long term interests of the consumers of electricity.
18 The first ISP was prepared by AEMO in 2018. In 2020, AEMO released its second ISP, with an update to the 2020 ISP being published in December 2021. A further ISP was released in 2022 (‘2022 ISP’).
19 In developing an ISP, AEMO engages in an extensive consultation process. The development of the 2022 ISP saw AEMO consult with Transmission Network Services Providers (‘TNSPs’), the ISP Consumer Panel, the Australian Energy Regulator (‘AER’), and external stakeholders including state governments, environmental advocacy groups, peak industry bodies, and private businesses.
20 Rule 5.22.6 of the NER requires AEMO to include the following in an ISP:
Contents of an Integrated System Plan
(a) An Integrated System Plan must:
(1) identify a range of development paths;
(2) for each development path, identify the group of projects that form part of the development path;
(3) describe how each development path performs under any sensitivities AEMO considers reasonable;
(4) identify the optimal development path which must be based on a quantitative assessment of the costs and benefits of various options across a range of scenarios, in accordance with Cost Benefit Analysis Guidelines;
(5) for the optimal development path, identify the actionable ISP projects, future ISP projects and ISP development opportunities;
(6) for each actionable ISP project specify:
(i) the date by which the project assessment draft report must be published and made available to relevant persons, which date must be:
(A) at least 6 months after, and within 24 months of, the date of publication of the Integrated System Plan; and
(B) based on the anticipated commencement date of the actionable ISP project;
(ii) the relevant Transmission Network Services Providers who will be the RIT-T proponent for the actionable ISP project;
(iii) the ISP candidate option or ISP candidate options;
(iv) the non-network options that were considered by AEMO as part of the Integrated System Plan process in relation to that actionable ISP project (where relevant);
(v) the identified need related to that actionable ISP project and whether it is reliability corrective action;
(vi) whether the actionable ISP project is a staged project;
(7) include the results of a net present value analysis for each development path for each scenario, together with an explanatory statement regarding the results.
21 An actionable ISP project is defined in the glossary to the rules as:
actionable ISP project
A project:
(a) that relates to a transmission asset or non-network option the purpose of which is to address an identified need specified in an Integrated System Plan and which forms part of an optimal development path; and
(b) for which a project assessment draft report is required to be published in the Integrated System Plan that identifies that project.
22 Within an ISP, AEMO will: (i) identify a range of development paths for development of transmission needs; (ii) identify the optimal development path to address power system needs; (iii) identify the actionable ISP projects, future ISP projects and ISP development opportunities that comprise the optimal development path; and, (iv) specify certain requirements for each actionable ISP project.
AEMO’s Capacity as TNSP in Victoria
23 Beyond its role as National Transmission Planner, AEMO acts in an additional capacity as a Transmission Network Services Provider or ‘TNSP’ in Victoria. A TNSP is a type of Network Services Provider, which is to be distinguished from a Distribution Network Services Provider. The NER defines a TNSP as ‘a person who engages in the activity of owning, controlling or operating a transmission system’.
24 The power to act as a TNSP in Victoria is conferred by the combined operation of s 49(1)(g) of the NEL and s 32 of the NEVA. Under s 49(1)(g) of the NEVA, AEMO is given power to undertake ‘declared network functions’ in an ‘adoptive jurisdiction’. By s 32 of the NEVA, Victoria is an adoptive jurisdiction within the meaning of the NEL. Accordingly, in Victoria, AEMO exercises the declared network functions under s 50C of the NEL:
50C—AEMO's declared network functions
(1) AEMO's declared network functions are as follows:
(a) to plan, authorise, contract for, and direct, augmentation of the declared shared network;
(b) to provide information about the planning processes for augmentation of the declared shared network;
(c) to provide information and other services to facilitate decisions for investment and the use of resources in the adoptive jurisdiction's electricity industry;
(d) to provide shared transmission services by means of, or in connection with, the declared shared network;
(e) any other functions, related to the declared transmission system or electricity network services provided by means of or in connection with the declared transmission system, conferred on it under this Law or the Rules;
(f) any other functions, related to the declared transmission system or electricity network services provided by means of or in connection with the declared transmission system, conferred on it under a law of the adoptive jurisdiction.
25 Combined, these provisions permit AEMO to act as a TNSP in Victoria. AEMO does not act as the TNSP in all jurisdictions. In NSW, the relevant TNSP is Transgrid Pty Ltd (‘Transgrid’).
Regulatory Investment Test for Transmission
26 The Regulatory Investment Test for Transmission or ‘RIT-T’ is a form of cost-benefit analysis that is applied to a potential transmission project in order to determine the ‘preferred option’ for addressing an ‘identified need’. Rule 5.15A of the NER contains the processes and specifications for the development and application of the RIT-T. The stated purpose of the RIT-T is as follows:
The purpose of the regulatory investment test for transmission in respect of its application to both types of projects is to identify the credible option that maximises the present value of net economic benefit to all those who produce, consume and transport electricity in the market (the preferred option). For the avoidance of doubt, a preferred option may, in the relevant circumstances, have a negative net economic benefit (that is, a net economic cost) to the extent the identified need is for reliability corrective action or the provision of inertia network services required under clause 5.20B.4.
27 Rule 5.15.2 NER defines a ‘credible option’ as follows:
(a) A credible option is an option (or group of options) that:
(1) addresses the identified need;
(2) is (or are) commercially and technically feasible; and
(3) can be implemented in sufficient time to meet the identified need,
and is (or are) identified as a credible option in accordance with this clause.
28 An identified need is defined in the glossary to the NER as:
identified need
The objective a Network Service Provider or a group of Network Service Providers seeks to achieve by investing in the network in accordance with the Rules or an Integrated System Plan.
29 The Australian Energy Regulator (‘AER’) is responsible for the development and publication of the RIT-T. The current edition of the RIT-T was published by the AER on 25 August 2020. The previous iteration and first edition was published on 29 June 2010. The RIT-T is a 13 page document setting out the principles to be applied in determining the preferred option from a range of credible options, with the ultimate objective being to maximise the net economic benefit to producers and consumers in the energy market.
30 The AER also develops and publishes the RIT-T Application Guidelines, which provide guidance on the operation and application of the RIT-T, the processes to be followed in applying the RIT-T and outlines how disputes regarding the application of the RIT-T are to be resolved. The AER is also required to develop and publish the Cost Benefit Analysis Guidelines which contains guidelines on the operation and application of the RIT-T. The RIT-T Application Guidelines apply in respect of RIT-T projects which are not actionable ISP projects, whereas the Cost Benefit Analysis Guidelines apply to RIT-T projects which are actionable ISP projects. The distinction between these two types of projects is explained below.
RIT-T Projects
31 The RIT-T scheme under the NER applies different principles for the application of the RIT-T in respect of different projects. The NER distinguishes between two types of projects: RIT-T projects which are not actionable ISP projects (a ‘non-actionable ISP project’) and RIT-T projects which are actionable ISP projects. The definition of a RIT-T project makes this distinction clear:
RIT-T project means:
(a) a project the purpose of which is to address an identified need identified by a Transmission Network Service Provider; or
…
(c) an actionable ISP project.
32 The distinction between an actionable and a non-actionable ISP project is relevant to how the RIT-T applies to a particular project. The NER notes at r 5.15A.1(b) that different regimes apply depending on whether the project is actionable or non-actionable:
The regulatory investment test for transmission will apply to RIT-T projects which are not actionable ISP projects (in accordance with rule 5.16) and to RIT-T projects which are actionable ISP projects (in accordance with rule 5.16A) but will differ in its application to each of those types of projects.
33 This distinction is significant in the present proceeding. The WRL project is a non-actionable ISP project, meaning the principles for the application the RIT-T to the WRL project are derived from r 5.16 of the NER. In contrast, the VNI West project is an actionable ISP project, having been identified as an actionable project in AEMO’s 2020 ISP. Therefore, the principles for the application of the RIT-T derive from r 5.16A of the NER.
Non-Actionable RIT-T Projects
34 Under the scheme, it is the role of TNSPs to ascertain identified needs. Having done so, a TNSP will then consider projects that may help address particular identified needs. A project intended to address an identified need (a need identified by a TNSP) is a RIT-T project.
35 The TNSP, having identified a RIT-T project, then assesses whether it is required to apply the RIT-T to the project. Not all RIT-T projects require application of the RIT-T. Rule 5.16.3(a) sets out the circumstances in which the RIT-T will not be necessary in respect of a RIT-T project. These include situations such as where the cost of the most expensive option is below the cost threshold of $5 million, or where the RIT-T project is required to address urgent and unforeseen network issues.
36 Once the TNSP has identified that the RIT-T is required in respect of a RIT-T project, the NER refers to the TNSP as a RIT-T proponent:
RIT-T proponent means the Network Service Provider applying the regulatory investment test for transmission to a RIT-T project to address an identified need. The RIT-T proponent may be:
(a) if the identified need is identified during joint planning under clause 5.14.1(d)(3), a Distribution Network Service Provider or a Transmission Network Service Provider; or
(b) in any other case (including under clause 5.14.3(a)), a Transmission Network Service Provider.
Consultation on RIT-T projects
37 Having identified that the RIT-T applies in respect of a RIT-T project, the RIT-T proponent must engage in the consultation process in accordance with r 5.16.4 of the NER.
38 The first step in the consultation process involves the preparation of a project specification consultation report (‘PSCR’). A PSCR sets out the identified need sought to be addressed and includes all credible options of which the RIT-T proponent is aware that would address the identified need. In respect of each credible option outlined in the PSCR, the RIT-T proponent is to provide details such as technical specifications, capital and operational costs, and construction timelines.
39 The RIT-T proponent is then required to make the PSCR available to all ‘Registered Participants’, AEMO and to other ‘interested parties’. An interested party is defined in r 5.15.1 as:
In clauses 5.16.4, 5.16A.4, rule 5.16B and clauses 5.17.4 and 5.17.5, interested party means a person including an end user or its representative who, in the AER's opinion, has the potential to suffer a material and adverse NEM impact from the investment identified as the preferred option in the project assessment conclusions report or the final project assessment report (as the case may be).
40 A summary must then be provided to AEMO, who publishes the summary on its website. The RIT-T proponent must then seek submissions on the credible options presented in the PSCR from Registered Participants, AEMO and interested parties. The consultation period must not be less than 12 weeks from the date of publication of the PSCR summary by AEMO.
41 Following the end of the consultation period, if a TNSP wishes to proceed with a RIT-T project, the RIT-T proponent must prepare a project assessment draft report (‘PADR’). The PADR must be prepared within 12 months of the end date of the consultation period, or such longer period as permitted by the AER.
42 The purpose of a PADR is to identify the preferred option from the credible options discussed in the PSCR, taking into consideration the matters raised in the PSCR consultation. Pursuant to r 5.16.4(k)(1)-(9), a RIT-T proponent must set out the following matters in a PADR:
(1) a description of each credible option assessed;
(2) a summary of, and commentary on, the submissions to the project specification consultation report;
(3) a quantification of the costs, including a breakdown of operating and capital expenditure, and classes of material market benefit for each credible option;
(4) a detailed description of the methodologies used in quantifying each class of material market benefit and cost;
(5) reasons why the RIT-T proponent has determined that a class or classes of market benefit are not material;
(6) the identification of any class of market benefit estimated to arise outside the region of the Transmission Network Service Provider affected by the RIT-T project, and quantification of the value of such market benefits (in aggregate across all regions);
(7) the results of a net present value analysis of each credible option and accompanying explanatory statements regarding the results;
(8) the identification of the proposed preferred option;
(9) for the proposed preferred option identified under subparagraph (8), the RIT-T proponent must provide:
(i) details of the technical characteristics;
(ii) the estimated construction timetable and commissioning date;
(iii) if the proposed preferred option is likely to have a material inter-network impact and if the Transmission Network Service Provider affected by the RIT-T project has received an augmentation technical report, that report; and
(iv) a statement and the accompanying detailed analysis that the preferred option satisfies the regulatory investment test for transmission.
43 The RIT-T proponent must then make the PADR available to Registered Participants, AEMO and interested parties (as defined in r 5.15.1 of the NER). As with the PSCR, a summary of the PADR is provided to AEMO for publication on its website. The RIT-T proponent will then seek submissions on the preferred option presented in the PADR. The period for consultation must not be less than 6 weeks from the date that AEMO publishes the PADR summary. Within 4 weeks of the conclusion of the consultation period, Registered Participants, AEMO and interested parties have a right to request a meeting with the relevant TNSP.
44 As soon as practicable after the PADR consultation period, the RIT-T proponent must prepare and publish a project assessment conclusions report (‘PACR’). A PACR must detail the matters set out above from r 5.16.4(k)(1)-(9) of the NER, alongside the RIT-T proponent’s response to any of the submissions raised during the PADR consultation period. The end result of the publication of a PACR is the identification of a preferred option to meet the identified need.
Actionable ISP Projects
45 The consultation process in relation to actionable ISP projects differs in relation to non-actionable projects and is governed by r 5.16A of the NER. However, as with a non-actionable ISP project, the RIT-T must determine whether the RIT-T applies to the RIT-T project by reference to the conditions in r 5.16.3(a).
46 Because a project is identified as an actionable ISP project in an ISP produced by AEMO, the consultation requirements for a RIT-T proponent are linked with the requirements for the actionable ISP project as set out in the ISP. Importantly, the ISP sets certain timelines for the preparation of a PADR as well as establishing the identified need that the project is directed towards.
47 Unlike a non-actionable ISP project, there is no requirement for a RIT-T proponent to produce a PSCR. However, in practice, a PSCR may be prepared prior to the RIT-T project becoming an actionable ISP project. For example, in December 2019, a PSCR was published in respect of the VNI West project in accordance with r 5.16.4(b) of the NER. The project was later included in AEMO’s 2020 ISP as an actionable ISP project.
48 A RIT-T proponent is required to produce a PADR in respect of an actionable ISP project. The PADR must:
(1) include the matters required by the Cost Benefit Analysis Guidelines;
(2) adopt the identified need set out in the Integrated System Plan (including, in the case of proposed reliability corrective action, why the RIT-T proponent considers reliability corrective action is necessary);
(3) describe each credible option assessed;
(4) include a quantification of the costs, including a breakdown of operating and capital expenditure for each credible option;
(5) assess market benefits with and without each credible option and provide accompanying explanatory statements regarding the results;
(6) if the RIT-T proponent has varied the ISP parameters, provide demonstrable reasons in accordance with 5.15A.3(b)(7)(iv);
(7) identify the proposed preferred option that the RIT-T proponent proposes to adopt; and
(8) for the proposed preferred option identified under subparagraph (7), the RIT-T proponent must provide:
(i) details of the technical characteristics; and
(ii) the estimated construction timetable and commissioning date.
49 As with a non-actionable ISP project, the RIT-T proponent must make the PADR available to Registered Participants, AEMO and interested parties. A summary of the PADR is provided to AEMO for publication on its website. The RIT-T proponent will then seek submissions on the preferred option presented in the PADR. The period for consultation must not be less than 6 weeks from the date that AEMO publishes the PADR summary. Within 4 weeks of the conclusion of the consultation period, Registered Participants, AEMO and interested parties have a right to request a meeting with the relevant TNSP.
50 As soon as practicable after the PADR consultation period, the RIT-T proponent must prepare and publish a project assessment conclusions report (‘PACR’). A PACR must details the matters set out above from r 5.16A.4(d) of the NER, alongside the RIT-T proponent’s response to any of the submissions raised during the PADR consultation period. The end result of the publication of a PACR is the identification of a preferred option to meet the identified need.
Re-application of the RIT-T
51 In respect of both actionable and non-actionable projects, a RIT-T proponent has the power under the NER to reapply the RIT-T to a project following the publication of a PACR. Rule 5.16.4(z3) of the NER contains the power to reapply the RIT-T in respect of a non-actionable ISP project such as the WRL project. Rule 5.16.4(z3) of the NER is one of the provisions disapplied by the February and May Orders. The Alliance contends that, but for the disapplication of r 5.16.4(z3), AEMO would have been required to reapply the RIT-T process to the WRL project.Rule 5.16.4(z3) provides:
(z3) If:
(1) a RIT-T proponent has published a project assessment conclusions report in respect of a RIT-T project;
(2) a Network Service Provider still wishes to undertake the RIT-T project to address the identified need; and
(3) there has been a material change in circumstances which, in the reasonable opinion of the RIT-T proponent means that the preferred option identified in the project assessment conclusions report is no longer the preferred option,
then the RIT-T proponent must reapply the regulatory investment test for transmission to the RIT-T project, unless otherwise determined by the AER.
(z4) For the purposes of paragraph (z3), a material change in circumstances may include, but is not limited to, a change to the key assumptions used in identifying:
(1) the identified need described in the project assessment conclusions report; or
(2) the credible options assessed in the project assessment conclusions report.
52 As set out in sub-rule (z3), the RIT-T proponent must reapply the RIT-T if they are of the reasonable opinion that a material change in circumstances means that the preferred option is no longer the preferred option. This is subject to the AER determining otherwise. The conditions for such a determination by the AER are set out in sub-rule (z5):
(z5) When making a determination under paragraph (z3) the AER must have regard to:
(1) the credible options (other than the preferred option) identified in the project assessment conclusions report;
(2) the change in circumstances identified by the RIT-T proponent; and
(3) whether a failure to promptly undertake the RIT-T project is likely to materially affect the reliability and secure operating state of the transmission network or a significant part of that network.
Augmentation
53 An augmentation is defined in s 2 of the NEL as follows:
augmentation of a transmission or distribution system means work to enlarge the system or to increase its capacity to transmit or distribute electricity;
54 Augmentations to the power grid are regulated by s 50F of the NEL. This provision was also disapplied by the Orders.
50F—Augmentation
(1) A declared transmission system operator must not augment the declared shared network, or any part of the declared shared network, unless—
(a) AEMO authorises or directs the operator to carry out the augmentation; or
(b) the operator wins a competitive tender conducted by AEMO to carry out the augmentation; or
(c) the augmentation is authorised by the Rules.
(2) In deciding whether a proposed augmentation to the declared shared network should proceed, AEMO—
(a) must undertake a cost benefit analysis; and
(b) must apply a probabilistic (as distinct from a deterministic) approach to determining the benefit of an augmentation unless—
(i) a probabilistic approach will not produce a materially different result; or
(ii) it is not reasonably practicable to use a probabilistic approach; or
(iii) a probabilistic approach is, for some other reason, inappropriate.
(3) Subject to the Rules, AEMO must conduct a competitive tender to determine who will carry out an augmentation to a declared shared network.
(4) A declared transmission system operator—
(a) must do anything required by the Rules to facilitate the planning, construction or operation of an augmentation; and
(b) must, at AEMO's request, do anything else reasonably required by AEMO to facilitate the planning, construction or operation of an augmentation.
(5) A declared transmission system operator must not engage in conduct that has the effect of preventing or hindering the planning, construction or operation of an augmentation.
55 Section 2 of the NEL defines ‘declared transmission system’ and ‘declared transmission system operator’ as follows:
declared transmission system of an adoptive jurisdiction has the meaning given by the application Act of that jurisdiction and includes any augmentation of the defined declared transmission system;
declared transmission system operator of an adoptive jurisdiction has the meaning given by the application Act of that jurisdiction;
56 Sections 30 and 31 of the NEVA state:
30 Declaration of declared transmission system
The Minister, by Order published in the Government Gazette, may declare a transmission system, or a part of a transmission system, situated wholly or substantially in Victoria to be the declared transmission system.
31 Declaration of declared transmission system operator
The Minister, by Order published in the Government Gazette, may declare a person who owns, controls or operates the declared transmission system, or a part of the declared transmission system, to be a declared transmission system operator.
57 On 26 June 2009, the then-Minister for Energy and Resources published an order in the Government Gazette pursuant to s 30 which declared the Victorian transmission system to be the declared transmission system.
Minister’s powers to modify and disapply the National Electricity Law
58 Division 7 of Part 3 of the NEVA is headed ‘Modification of regulatory arrangements for specified declared transmission system augmentations and related services’. Division 7 of Part 3 was inserted into the NEVA by the National Electricity (Victoria) Amendment Act 2020. These provisions are central to the resolution of the issues which fall for determination in the present proceeding.
59 Section 16Y of the NEVA confers on the Minister power to make orders disapplying or modifying aspects of the NEL and NER. Section 16Y(1) contains the power to make various orders:
16Y Order modifying regulatory arrangements relating to declared transmission system augmentations and related services
(1) Subject to this Division, the Minister, by Order published in the Government Gazette, may do any one or more of the following—
(a) specify, for the purposes of the Order—
(i) the carrying out of, or operation of, an augmentation of the declared transmission system as a specified augmentation;
(ii) services provided or to be provided in relation to or by means of a specified augmentation as specified augmentation services;
(iii) non-network services as specified non-network services;
(b) provide that Subdivision 3 of Division 2 of Part 5 of the Law, or a specified provision of that Subdivision, does not apply as a law in Victoria in respect of—
(i) a specified augmentation;
(ii) specified augmentation services;
(c) modify the application of a specified provision of Subdivision 3 of Division 2 of Part 5 of the Law as it applies as a law in Victoria in respect of—
(i) a specified augmentation;
(ii) specified augmentation services;
(d) provide that a specified provision of the Rules does not apply in respect of—
(i) a specified augmentation;
(ii) specified augmentation services;
(iii) specified non-network services;
(e) modify the application of a specified provision of the Rules to—
(i) a specified augmentation;
(ii) specified augmentation services;
(iii) specified non-network services;
…
(i) regulate—
(i) a specified augmentation;
(ii) specified augmentation services;
(iii) specified non-network services;
60 Subsection 16Y(2) non-exhaustively sets out the range of orders which may be made under s 16Y(1). Subsection 16Y(5) is of similar effect:
(5) An Order under subsection (1) may—
(a) be of limited or general application;
(b) differ according to time, place or circumstances;
(c) confer functions and powers on, or leave any matter or thing to be decided by, AEMO;
(d) apply, adopt or incorporate any matter contained in any document, whether—
(i) wholly or partially or as amended by the Order; or
(ii) as existing at the time the Order is made or at any time before then; or
(iii) as existing from time to time;
(e) contain provisions of a savings or transitional nature on the making of the Order;
(f) provide for any matter that is incidental to a matter set out in the Order or necessary to give effect to a matter set out in the Order.
Procedure for Making an Order
61 Section 16Z of the NEVA sets out matters to which the Minister may have regard
16Z Matters that the Minister may have regard to in making an Order
(1) In making an Order under section 16Y, the Minister may have regard to any one or more of the following—
(a) whether there is or may be a crucial national electricity system need in Victoria or in Victoria and another participating jurisdiction;
(b) options available under the Law and the Rules to address any crucial national electricity system need, including alternatives to augmentations of the declared transmission system;
(c) the potential costs to end users of any options referred to in paragraph (b);
(d) the immediate, medium and long-term needs of the national electricity system, including needs relating to the reliability, safety and security of the national electricity system;
(e) the actual or projected amount of generation or reserve in the national electricity system.
(2) In addition, in making an Order under section 16Y, the Minister may have regard to any other matter that the Minister considers relevant.
62 Before making an order, the Minister must engage in consultation:
16ZA Consultation before the making of an Order
(1) Before making an Order under section 16Y, the Minister must consult with—
(a) the Premier; and
(b) the Treasurer; and
(c) AEMO.
63 The Minister must also provide reasons accompanying her order:
16ZB Publication of reasons for the making of an Order
(1) The Minister must publish in the Government Gazette the Minister's reasons for making an Order under section 16Y at the same time as the Order is published in the Government Gazette.
(2) In addition, the Minister must publish the Minister's reasons for making an Order under section 16Y on the Department's internet site as soon as practicable after the reasons are published in the Government Gazette.
Effect of an order under s 16Y
64 Subsection 16Y(4) provides that an order made under s 16Y(1) may disapply or modify other aspects of the NEL or NER, as a consequence of the disapplication or modification of the provisions specified in the order:
(4) Without limiting subsection (1), an Order under that subsection may—
(a) disapply, or modify the application of a provision of, the Law as a consequence of a provision of the Order that disapplies or modifies the application of another provision of the Law in respect of—
(i) a specified augmentation; or
(ii) specified augmentation services; or
(b) disapply, or modify the application of a provision of, the Rules as a consequence of a provision of the Order that disapplies or modifies the application of another provision of the Rules in respect of—
(i) a specified augmentation; or
(ii) specified augmentation services; or
(iii) specified non-network services;
65 Section 16ZC sets out the legal effect of an order made by the Minister under s 16Y:
16ZC Effect of Order
(1) An Order under section 16Y has effect according to its tenor in relation to the following despite anything to the contrary in this Act or in any agreement or contract—
(a) a specified augmentation;
(b) specified augmentation services;
(c) specified non-network services.
(2) To avoid doubt, section 32 applies subject to an Order under section 16Y.
(3) In addition—
(a) the Law applies as a law of Victoria in relation to—
(i) a specified augmentation subject to the Order under section 16Y specifying that augmentation; and
(ii) specified augmentation services or specified non-network services subject to the Order under section 16Y specifying those services, as the case requires; and
(b) the Rules have the force of law in Victoria in relation to—
(i) a specified augmentation subject to the Order under section 16Y specifying that augmentation; and
(ii) specified augmentation services or specified non-network services subject to the Order under section 16Y specifying those services, as the case requires.
66 Section 16ZG provides that an order under s 16Y(1) is not a legislative instrument for the purposes of the Subordinate Legislation Act 1994.
Summary
67 For the purposes of this judgment, the following aspects of the statutory scheme are important:
• The National Electricity Law (‘NEL’) and National Electricity Rules (‘NER’) apply in Victoria pursuant to the National Electricity (Victoria) Act 2005 (‘NEVA’)
• AEMO acts in two capacities. In Victoria, by reason of s 32 of the NEVA it acts as a Transmission Network Services Provider (‘TNSP’). It also acts as National Transmission Planner with functions conferred by s 49(2) of the NEL.
• The Regulatory Investment Test for Transmission (‘RIT-T’) is a cost benefit analysis published by the Australian Energy Regulator. A RIT-T is conducted by a TNSP, who is called a RIT-T proponent.
• The RIT-T considers all credible options to meet an identified need. The end result of the RIT-T is the identification of the preferred option to meet the identified need.
• The RIT-T process is set out in the NER. Rule 5.16 contains the rules for applying the RIT-T to a non-actionable ISP project (such as the WRL project). Rule 5.16A contains the rules applying the RIT-T to an actionable ISP project (such as the VNI West project).
• The RIT-T process consists of three stages. First, the publication of a Project Specification Consultation Report (‘PSCR’). Second, the publication of a Project Assessment Draft Report (‘PADR’). Third, the publication of a Project Assessment Conclusions Report (‘PACR’). In a PACR, the RIT-T proponent identifies the preferred option to meet the identified need. The PACR will also reflect the submissions the RIT-T proponent has received from, inter alia, interested parties.
• Rule 5.15.1 defines an ‘interested party’ as an end user or its representative who, in the AER’s opinion, has the potential to suffer a material and adverse NEM impact from the investment identified as the preferred option in the PACR or the final project assessment report.
• Rule 5.16.4(z3) of the NER confers power on a RIT-T proponent to reapply the RIT-T after publication of a PACR where there is a material change in circumstances that means that the preferred option is no longer the preferred option.
• Section 16Y(1) of the NEVA confers power on the Minister to make an order disapplying or modifying aspects of the NEL and NER in relation to specified projects.
68 Annexed to this judgment as Annexure A is a joint glossary of key terms filed by the parties which provides a helpful summary of the key provisions of the legislative scheme.
The WRL Project
69 The WRL project is a proposed augmentation to the transmission capacity of the Victorian energy grid. In its current iteration, the augmentation consists of 500kV transmission lines running westward from Sydenham to Bulgana. The augmentation requires the construction of a new terminal stations at Sydenham, as well as minor works on the existing terminal station at Bulgana. The WRL project was formerly known as the Western Victoria Transmission Network Project (‘WVTNP’), before being renamed the WRL project in 2022.
70 The need for augmentation of the Western Victorian transmission system was first identified in AEMO’s 2016 National Transmission Network Development Plan. There, AEMO identified a high level of interest in renewable generation connection in Western Victoria. This interest was coupled with a need to meet growing demands for electricity generation in the state’s west. Existing transmission infrastructure would be unable to meet growing demand due to thermal and system strength limitations.
71 In April 2017, pursuant to its obligations under r 5.16.4(b) of the NER, AEMO published a PSCR titled Western Victoria Renewable Energy Integration (‘WRL PSCR’). The WRL PSCR stated that the identified need for investment as being the need to ‘increase the capability of the Western Victoria power system, to reduce constraints on projected new generation in that region’. AEMO echoed its concerns that an increase in power generation in Western Victoria would lead to heavy strain on existing transmission infrastructure caused by thermal limitations. These limitations on the existing transmission network would lead to inefficient power generation, resulting in higher consumer electricity prices. The WRL PSCR sought to quantify the benefits of augmentations to transmission infrastructure.
72 The WRL PSCR outlined five credible options to address the identified need:
1. Minor network augmentations – This refers to minor line upgrades to remove rating limiting station equipment, and to enable wind monitoring. This option will not fully remove constraints on the worst affected lines, but can be deployed quickly. Control schemes to quickly run back or trip generation after a transmission line trip can be used to prevent pre-contingency generation curtailment.
2. New 220 kV transmission capacity – 220 kV transmission capacity can be gradually added to the worst congested parts of the network, as new generation becomes committed. New 220 kV transmission capacity may be enough for up to 1,500 MW of new generation capacity in the North-West Victoria area, between Ballarat to Red Cliffs to Kerang, although localised constraints may still be present.
3. New 275 kV or 330 kV transmission capacity – 275 kV or 330 kV transmission capacity can be added from Buronga Terminal Station to Red Cliffs Terminal Station, if the New South Wales transmission network between Buronga to Darlington Point is upgraded, and if a new South Australia to New South Wales interconnector is built.
4. New 500 kV transmission capacity – 500 kV transmission capacity may be required if over 1,500 MW of new generation capacity connects between Ballarat to Red Cliffs to Kerang, or if a new South Australian interconnector is connected to the area around Horsham Terminal Station.
5. Non-network options – Non-network options to address thermal limitations have been identified by a Request for Information that AEMO published in February 2017.10 In general, non-network options will be treated as NMAS, and would be used to reduce transmission line loadings, or to increase local fault levels.
73 Following the release of the WRL PSCR, AEMO engaged in industry and stakeholder consultation in respect of the five credible options presented by the WRL PSCR. In December 2018, AEMO released the WRL PADR, pursuant to its obligations under r 5.16.4(j) of the NER. The WRL PADR adopted the identified need outlined in the WRL PSCR, with some minor amendments owing to considerations raised by AEMO in the 2018 ISP.
74 The WRL PADR canvassed five broad categories of credible options:
Category A: Minor network augmentations.
Option A1 – minor transmission line upgrades for the Red Cliffs to Wemen to Kerang to Bendigo, and Moorabool to Terang to Ballarat, 220 kV transmission lines.
– These are the short-term minor augmentations in the preferred staged augmentation described above.
Category B: 220 kV network augmentation only.
Option B2 – construction of a new 220 kV double circuit line from Moorabool to Elaine to Ballarat to Bulgana to Horsham. Retire Ballarat to Moorabool circuit 220 kV circuit No. 1, and cut in Ballarat to Moorabool circuit No. 2 at Elaine.
Option B3 – construction of a new 220 kV double circuit line from Moorabool to Elaine to Ballarat to Bulgana. Retire Ballarat to Moorabool 220 kV circuit No. 1, and cut in Ballarat to Moorabool circuit No. 2 at Elaine.
Option B4 – rebuild existing Moorabool to Elaine to Ballarat to Bulgana 220 kV single circuit transmission line as a 220 kV double circuit transmission line. Cut in Ballarat to Moorabool 220 kV circuit No. 2 at Elaine.
Category C: 500 kV and 220 kV network augmentation.
Option C1 – construction of a new 500 kV double circuit line from Sydenham to Ararat, with two new 1,000 MVA 500/220 kV transformers at Ararat. Cut in Ballarat to Moorabool circuit No. 2 at Elaine.
Option C2 – construction of a new 500 kV double circuit line from Sydenham to Ballarat. Construction of a new 220 kV double circuit line from Ballarat to Bulgana, with two new 1,000 MVA 500/220 kV transformers at Ballarat. Cut in Ballarat to Moorabool 220 kV circuit No. 2 at Elaine. Construction of a new terminal station close to Ballarat, with a 220 kV double circuit connection to Ballarat.
– These are the medium-term major augmentations in the preferred staged augmentation described above.
Category D: Red Cliffs to Buronga network augmentation.
Option D1 – construction of a new 220 kV double circuit line from Red Cliffs to Buronga (operated as a single circuit initially) and a 400 MVA 330/220 kV transformer at Buronga, to be considered under the South Australian Energy Transformation (SAET) RIT-T.
Category E: Non-network options
Option E1 – construction of a new 100 MW/400 MWh battery storage system at Ararat Terminal Station.
75 The PADR identified the preferred option as a two stage development involving short term minor transmission line augmentations (option A1) and medium term major transmission network augmentations (option C2):
Short term: present to 2021.
Minor transmission line augmentations, including wind monitoring and upgrading station limiting transmission plant, carried out for the Red Cliffs to Wemen to Kerang to Bendigo, and Moorabool to Terang to Ballarat, 220 kV transmission lines.
Medium term: 2021 to 2025.
The following major transmission network augmentations (staged):
By 2024: New 220 kV double circuit transmission lines from Ballarat to Bulgana.
By 2025: New 500 kV double circuit transmission lines from Sydenham to Ballarat connecting two new 1,000 MVA 500/220 kV transformers at Ballarat.
76 The WRL PADR contained this diagram of the preferred option:
77 The above diagram was followed by a caveat:
Note that the transmission line route identified for each option is indicative only. The actual transmission line routes will be determined during the detailed design and route assessment phase, after conclusion of the RIT-T process. New terminal stations may be required to connect the new transmission lines, and this will also be determined during the detailed design phase.
78 Following publication of the WRL PADR, AEMO again engaged in consultation in respect of the preferred option. This culminated in the publication of the WRL PACR in July 2019. In the WRL PACR, AEMO gave in depth consideration to two credible options, being options B3 and C2. The WRL PACR confirmed the preferred option outlined in the WRL PADR, being option C2.
79 The scope of option C2 was varied in the WRL PACR. In the WRL PACR, the minor augmentation works contemplated by option A1 were incorporated into the design of option C2. AEMO also specified a number of further significant refinements to the design of option C2:
Refinements to Option C2:
– The PADR specified that power flow controllers may be required to manage transmission line flows between North Ballarat to Bulgana. The PADR also allowed for a new 220 kV double circuit transmission line between Ballarat to North Ballarat Terminal Station.
– The PACR proposes instead to:
Connect one of the proposed Bulgana to North Ballarat circuits to Waubra Terminal Station and disconnect Waubra Terminal Station from the existing Ballarat to Waubra to Ararat to Crowlands to Bulgana 220 kV transmission line to manage transmission line flows between Ballarat to Bulgana.
Install additional circuit breakers at Ballarat Terminal Station to establish a bus splitting control scheme following a critical contingency.
Connect the existing Ballarat to Bendigo 220 kV transmission line to North Ballarat Terminal Station, forming a new Ballarat to North Ballarat to Bendigo 220 kV transmission line.
Install 4 x 50 megavolt amperes – reactive (MVAr) reactors on each end of the 500 kV transmission lines from Sydenham to North Ballarat Terminal Station.
80 The following diagram of option C2 was included in the WRL PACR:
81 Similar to the diagram contained in the WRL PADR, the diagram was subject to the following qualification:
Note: the locations of the proposed new terminal station and new transmission lines shown in this figure are illustrative only. Matters such as route selection will be considered after the conclusion of the RIT-T process.
82 Following the conclusion of the RIT-T process, AEMO entered into a competitive tender process for the construction of the WRL project. Following that process, AusNet Transmission Group (‘AusNet’) was selected to build, design, own and operate the WRL project. By mid-2020, AusNet had begun the process of refining the route for the WRL Project. AusNet submitted an Environment Effects Statement referral to the Minister for Planning. The Environment Effects Statement referral set out the area of interest for the proposed WRL project.
83 The preferred option outlined in the WRL PACR has been subject to alteration following the making of the Minister’s May Order and publication of the VNI West PACR. These changes are addressed in greater detail below; however, the project now consists of 500kV transmission lines running directly from Sydenham to Bulgana, removing the need for the construction of the North Ballarat terminal station.
The VNI West Project
84 The Victoria-New South Wales Interconnector West (‘VNI West’) project is a proposed transmission infrastructure project that connects with the WRL project at Bulgana station. From there, transmission lines carry electricity from Bulgana northeast to a new terminal station located near Kerang. The transmission lines then cross the NSW border at the Murray River to the north of Kerang. The transmission lines continue northeast before connecting with a substation at Dinawan, NSW.
85 AEMO and Transgrid are joint RIT-T proponents for the project. AEMO, as the Victorian TNSP, has carriage of the Victorian aspects of the project and is subject to the NEL and NER as applied by the NEVA. Transgrid is responsible for the NSW aspects of the project and is subject to the NEL and NER as applied by the NENA.
86 The VNI West PSCR was published by AEMO and Transgrid as joint RIT-T proponents in December 2019. In the VNI West PSCR, AEMO and Transgrid set out the identified need that the project sought to address:
The identified need is for additional transfer capacity between New South Wales and Victoria to realise net market benefits by:
• Efficiently maintaining supply reliability in Victoria following the closure of further coal-fired generation and the decline in ageing generator reliability – including mitigation of the risk that existing plant closes earlier than expected.
• Facilitating efficient development and dispatch of generation in areas with high quality renewable resources in Victoria and southern New South Wales through improved network capacity and access to demand centres.
• Enabling more efficient sharing of resources between NEM regions.
87 The PSCR considered six credible options as detailed in the diagram below:
88 The publication of the VNI West PSCR was followed by a period of consultation before the publication of the VNI West PADR in July 2022. However, prior to the publication of the VNI West PADR in July 2022, AEMO published the 2022 ISP in June of that year. Significantly, the 2022 ISP identified the VNI West project as an actionable ISP project, bringing it within the RIT-T process set out in r 5.16A of the NER.
89 The VNI West PADR assessed two credible options:
1. VNI West – a new high capacity 500 kV double-circuit overhead transmission line to connect the Western Renewables Link (north of Ballarat) with Project EnergyConnect (at Dinawan) via new stations near Bendigo and near Kerang.
2. A VTL commissioned ahead of VNI West (which would continue to form part of this option), involving batteries at South Morang in Victoria and Sydney West in New South Wales. This option has arisen from submissions to the PSCR and subsequent detailed network analysis by AVP and Transgrid.
90 The first option, VNI West, as set out in the diagram below, was selected as the preferred option.
91 Following publication of the VNI West PADR, AEMO and Transgrid published a project update for VNI West on 2 December 2022. The project update contained statements indicating that AEMO and Transgrid were considering changing the route of the VNI West project to intersect with the WRL project at Bulgana, rather than at the proposed North Ballarat station:
While feedback on the PADR will be considered in the PACR, one of the key issues identified through the submissions and engagement was the connection of VNI West to Western Renewables Link (WRL) at the proposed terminal station north of Ballarat, Victoria, and its compatibility with land use between Ballarat and Bendigo.
In response, [AEMO] and Transgrid are embarking on an investigation of alternative VNI West options, still running via a terminal station near Kerang, but with connection to WRL west of the currently proposed terminal station, including areas around Bulgana (Wotjobaluk Country) and Waubra/Lexton (Djaara Country)….
Our analysis of potential alternative options is not complete, and no decision has been made to change the currently proposed location for connection to WRL. Any changes to the configuration of WRL may have potential implications for the timing and scope of the WRL Environmental Effects Statement.
The February Order and Option 5
92 Following the publication of the project update indicating that AEMO and Transgrid were investigating an alteration to the route of the preferred option identified in the VNI West PADR, the Minister exercised her powers under s 16Y of the NEVA to permit AEMO and Transgrid to consider alternative options to the preferred option identified in the VNI West PADR. Relevantly, the February Order disapplied rules 5.15A and 5.16A of the NER and permitted AEMO and Transgrid to select a new preferred option for the VNI West project, without having to restart the RIT-T process.
93 Following the making of the February Order, on 23 February 2023 AEMO and Transgrid published a document titled ‘VNI West Consultation Report – Options Assessment’ (‘Options Assessment’). In the Options Assessment, AEMO and Transgrid considered seven credible options. This included the two credible options already considered in the VNI West PADR, alongside five new options:
94 AEMO and Transgrid ultimately selected option 5 (the ‘Bulgana option’ in the diagram above) as the preferred option. Option 5 addressed the concerns noted by AEMO and Transgrid in the December 2022 project update regarding the compatibility of the VNI West project with land use between Ballarat and Bendigo. Rather than connecting with the WRL Project at the proposed terminal station in North Ballarat, option 5 connects with the WRL Project at Bulgana.
The May Order and Option 5A
95 Following the release of the Options Assessment, AEMO and Transgrid engaged in further stakeholder consultation. Various issues were raised with the proposed option 5, leading AEMO and Transgrid to investigate further options to address the identified need.
96 On 3 May 2023, Mr Daniel Westerman, the CEO of AEMO, wrote to the Minister regarding the VNI West project. In the letter, Mr Westerman requested the Minister to make an order pursuant to s 16Y of the NEVA to permit AEMO to select proposed option 5A as the preferred option in the VNI West PACR. The letter attached a draft VNI West PACR which identified option 5A as the preferred option. Mr Westerman sent the Minister a second letter attaching a final draft of the VNI West PACR on 22 May 2023.
97 On 27 May 2023, the Minister made an order pursuant to s 16Y(1) of the NEVA. Relevantly, the May Order disapplied rules 5.15A and 5.16A of the NER in respect of the VNI West project. The principal effect of the May Order was to require AEMO to publish a PACR that identified option 5A as the preferred option, without option 5A being subject to a RIT-T process. Later that day, AEMO and Transgrid published the VNI West PACR. Option 5A was selected as the preferred option.
98 Options 5 and 5A both commence at Bulgana and run northeast, via a proposed station at Kerang, across the Murray River to Dinawan, NSW. However, option 5A crosses the Murray River further to the northwest. Importantly, the publication of the VNI West PACR did not set the precise route for the VNI West project. Rather, it established an area of interest to be refined following the completion of the RIT-T process. The area of interest was illustrated in the VNI West PACR as follows:
The caption accompanying the above diagram notes that the width of the areas of interest range from between 10 to 50 kilometres.
99 The principal change between option 5 as outlined in the VNI West PADR and option 5A was the relocation of the connection point between the VNI West and WRL projects from the proposed terminal station at North Ballarat to the terminal station at Bulgana. The adoption of option 5A as the preferred option removed the need to build a new terminal station at North Ballarat. Despite removing the need to build a new terminal station at North Ballarat, it is common ground in the present proceeding that the adoption of option 5A did not alter the route of the WRL project.
100 Option 5A also affected the type of transmission lines running between Bulgana and Sydenham on the WRL project. The preferred option specified in the WRL PACR (option C2) only required 500kV transmission lines between Sydenham and the North Ballarat station. As a consequence of the May Order, the entirety of the transmission lines to be constructed for the WRL Project will be 500kV transmission lines.
The February Order
101 On 20 February 2023, the Minister issued an order pursuant to s 16Y(1) of the NEVA. The February Order and Reasons are Annexure B to this judgment. Clauses 3 and 4 of February Order designate two ‘specified augmentations’ in respect of which the order applies:
3. Specified augmentation – VNI West
The carrying out of all works to construct a new high-capacity transmission line between Victoria and New South Wales connecting the Western Renewables Link with Project Energy Connect to meet the identified need described in the VNI West PADR and VNI West PACR and all associated works, insofar as such works are an augmentation of the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
4. Specified augmentation – WRL
The carrying out of all works to meet the identified need described by AEMO in the WRL PACR, including but not limited to:
(a) proposed high voltage transmission lines,
(b) new terminal stations, and
(c) all associated works, insofar as such works relate to the declared transmission system,
is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
102 Clause 6.1 confers various functions on AEMO in respect of the VNI West and WRL projects. Relevantly, AEMO was conferred the function of assessing alternate options to the preferred options outlined in both the VNI West PADR and WRL PACR:
6.1 AEMO is conferred the following functions in respect of the specified augmentations:
(a) assessing alternate options to the preferred options described in the VNI West PADR and the WRL PACR to facilitate and expedite the development, delivery, construction and energisation of the specified augmentations or otherwise better meet a crucial national electricity system need in Victoria or in Victoria and another participating jurisdiction, including options in relation to:
(i) alternate routes, nodes, terminal stations and transmission network design,
(ii) other augmentations of the declared transmission system, and
(iii) changes to the WRL;
Clause 5 stipulates that ‘AEMO is required to carry out the functions in respect of the specified augmentations conferred on it by this Order’.
103 Clause 6.8 disapplies a number of provisions of the NEL and NER:
6.8 The following provisions do not apply in respect of the specified augmentations or any of AEMO’s functions under this Order:
(a) sections 50F(2), 50F(3) and 50H of the Law;
(b) rules 5.15A, 5.16, 5.16A and 5.16B of the Rules;
(c) clauses 8.11.4, 8.11.6, 8.11.7, 8.11.8, 8.11.9 and Schedule 8.11 of the Rules; and
(d) AEMO’s planning criteria published in accordance with clause 8.11.4 of the Rules.
104 Further, clause 6.9 requires AEMO to publish a PACR for the VNI West project with Transgrid:
RIT-T
6.9 Despite clause 6.8, AEMO must prepare and publish a PACR for VNI West with Transgrid.
The May Order
105 On 27 May 2023, the Minister issued a second order pursuant to s 16Y of the Act. The May Order and Reasons are Annexure C to this judgment. The May Order relates to three specified augmentations:
Specified augmentation - VNI West
3.1 The carrying out of all works to construct a new high-capacity transmission line between Victoria and New South Wales connecting the Western Renewables Link with Project Energy Connect to meet the identified need described in the VNI West PADR and all associated works, insofar as such works are an augmentation of the declared transmission system. is a specified augmentation for the purposes of Division 7 of Part 3 of the Act (VNI West)
3.2 Without limiting clause 3.1, the carrying out of all works specified in Schedule l is a specified augmentation for the purposes of Division 7 of Part 3 of the Act, insofar as such works are an augmentation of the declared transmission system.
3.3 For the avoidance of doubt, all works carried out by AEMO under clause 6 of the 20 February Order (and whether before or after the date of this Order) in respect of VNI West are part of the specified augmentation.
Specified augmentation - WRL
3.4 The carrying out of all works to meet the identified need described by AEMO in the WRL PACR, including but not limited to:
(a) proposed high voltage transmission lines;
(b) new terminal stations; and
(c) all associated works,
insofar as such works relate to the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
Specified augmentation - WRL Uprate
3.5 Without limiting clause 3.4, the carrying out of all works specified in Schedule 2, insofar as such works relate to the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
106 The May Order operates in addition to the February Order, while also revoking certain aspects of the February Order:
4.7 The functions conferred under clauses 6.l(a), 6.l(b), 6.l(c), 6.l(e) and 6.9 of the 20 February Order are revoked.
4.8 Subject to clause 4.7, the functions conferred under clause 4.6 of this Order are in addition to the functions conferred on AEMO by the 20 February Order and the functions under clause 6.l(f) of the 20 February Order extend to VNI West being the specified augmentation referred to in clause 3.1.
…
9. SAVINGS
9.1 Nothing in this Order invalidates or limits anything done under the 20 February Order.
9.2 The 20 February Order continues in full force and effect, save as modified by this Order.
107 Clause 4.7 of the May Order revoked AEMO’s powers, contained in clauses 6.1(a) and 6.9 of the February Order to assess alternate options and produce a PACR with Transgrid. Those powers were in effect replaced by the obligations in clauses 4.4-5, which required AEMO to prepare and publish a PACR with Transgrid identifying the VNI West augmentation specified in clauses 3.1-3 as the preferred option:
AEMO's functions in respect of the VNI West
4.4 AEMO is conferred the function of preparing and publishing a PACR with Transgrid for VNI West.
4.5 For the purposes of the PACR for VNI West to be published under clause 4.4, AEMO is required to identify the augmentation specified in clause 3.2 as the preferred option.
108 Unlike the February Order, which adopted the definition of PACR found in the NER, the May Order defined PACR as follows:
PACR means a project assessment conclusions report setting out an assessment of the options for VNI West required to be published under clause 4.4 of this Order.
109 Clause 5 of the May Order disapplied a number of other provisions of the NEL and NER:
5. MODIFICATION OF LAW AND RULES
5.1 VNI West and the WRL Uprate are not contestable augmentations and the definition of contestable augmentation and clause 8.11.3 of the Rules are modified accordingly.
5.2 The following provisions do not apply in respect of the augmentations specified under this Order or to any of AEMO's functions conferred under this Order:
(a) sections 50F(2), 50F(3) and 50H of the Law;
(b) clauses 5.15A, 5.16, 5.16A and 5.16B of the Rules;
(c) clauses 8.11.4, 8.11.6, 8.11. 7, 8.11.8, 8.11.9 and Schedule 8.11 of the Rules; and
(d) AEMO's planning criteria published in accordance with clause 8.11.4 of the Rules.
Standing
110 Before addressing the grounds upon which the Alliance challenges the February and May Orders it is necessary to address the Minister’s contention that the Alliance does not have standing to seek judicial review of the Orders. Shortly stated, the Minister contends that the Alliance does not have a special interest in the subject matter of the present proceeding. In response, the Alliance contends that there are two pathways by which it has standing to challenge the validity of the Orders. First, that it has a special interest in the subject matter of the proceeding because, if it succeeds in its challenge to the validity of the Orders, it will be able to exercise legal rights which have otherwise been rendered futile by the Orders. Second, if it does not have standing by reason of the adverse effect of the Orders upon its legal interests, it nevertheless has standing by virtue of ‘the general law of standing’.
303 The Alliance has failed to demonstrate that the Minister’s exercise of the power under s 16Y to make the May Order was motivated by an improper purpose.
Ground 3 – Failure to Specify
304 The Alliance’s third ground concerns an alleged failure by the Minister to exercise the power under s 16Y of the NEVA in respect of both the February and May Orders by reason of a failure to specify the augmentation. The Alliance submitted as follows:
The Minister has power under s 16Y of the NEVA to make certain Orders with respect to a “specified” augmentation of the declared transmissions system: s 16Y(1)(a)(i). Accordingly, if the Minister has failed to lawfully “specify” an augmentation in either Order, the Order is invalid.
305 The Alliance submits that the use of the word ‘specify’ in s 16Y(1)(a) imports a requirement of ‘unambiguous clarity’ as to the particular augmentation that is to become the ‘specified augmentation’. The Alliance submits that the February and May Orders inadequately specify the augmentations which are subject to the Orders, with the consequence that the Minister’s power to make the Orders was not properly exercised.
Specification of the WRL project in both Orders
306 The Alliance submits that in both Orders, the identification of the WRL project did not meet the requirement of specificity imposed by s 16Y(1)(a). The Minister specified the WRL project in cl 4 of the February Order and cl 3.4 of the May Order as follows:
The carrying out of all works to meet the identified need described by AEMO in the WRL PACR, including but not limited to:
(a) proposed high voltage transmission lines;
(b) new terminal stations; and
(c) all associated works,
insofar as such works relate to the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
307 The Alliance submits that the expression ‘identified need described by AEMO in the WRL PACR’ gave rise to uncertainty due to the way in which the ‘identified need’ was expressed in the WRL PACR:
The need for transmission investment, as identified in the PADR, is unchanged. Investment is required to reduce constraints on anticipated new and existing generation in Western Victoria, to deliver an increase in benefits to both energy consumers and energy producers (that is, an increase in the sum of consumer and producer surplus in the National Electricity Market [NEM]) through significant reductions in the capital cost and dispatch cost of generation over the longer term.
308 The Alliance advanced two submissions in support of the contention that the Minister failed to adequately specify the augmentation for the purposes of the February and May Orders. First, that the definition of the identified need in the WRL PACR incorporated an earlier definition of the identified need in the WRL PADR that was inconsistent with the identified need in the WRL PACR. The incorporation of the WRL PADR was said to arise from the words ‘the need for transmission investment, as identified in the PADR, is unchanged’. The Alliance submitted that the inconsistency between the WRL PADR’s definition of the identified need and that found in the WRL PACR meant that the Minister had failed to adequately specify the augmentation.
309 Second, that, in any event, the terms employed by the WRL PACR to define the identified need were not sufficiently specific to constitute a valid exercise of the power. The Alliance submits that the language employed by the WRL PACR to define the identified need imports ‘highly evaluative contestable questions’ about the nature and purposes of a particular augmentation, with the result that the Minister failed to ‘specify’ the relevant augmentation. Mr Wood submitted that on a proper construction of s 16Y(1)(a), the requirement to ‘specify’ would ‘potentially’ require any order to set out the route of the proposed transmission line.
Consideration
310 Dealing first with the submissions advanced by the Alliance in respect of the WRL project, I reject the Alliance’s submission that the specification was inadequate. The reference to the ‘carrying out of all works to meet the identified need described by AEMO in the WRL PACR’ constitutes a specification for the purposes of s 16Y(1)(a).
311 I do not accept the Alliance’s submission that the sentence in the WRL PACR ‘the need for transmission investment, as identified in the PADR, is unchanged’ incorporates the description of the identified need in the PADR. First, that sentence must be read in context. As set out above, the sentence is followed by a positive description of the identified need.
312 Second, I accept the Minister’s submission that the reference to the identified need in the PADR being unchanged is a reflection of the statutory scheme, which is premised on the continuity of the identified need throughout the RIT-T process. The identified need provides a reference point for a RIT-T proponent’s identification of credible options throughout the process of publishing a PSCR, PADR and PACR.
313 The Alliance submits that the specification of the WRL project required a level of specificity in excess of that contained in the February and May Orders. In support of this submission, the Alliance relies on the following passage from the judgment of Burchett J in Gantry Acquisition Corporation v Parker and Parsley Petroleum Australia Pty Ltd (‘Gantry Acquisition’):
[N]o change wrought by the contextual currents enveloping the word “specify” … can so transform it that it fails to signify a requirement of clarity and precision … Judicial attempts to expound the meaning of the word “specify” have repeatedly fixed upon unambiguous clarity as being connoted by it.
Burchett J nevertheless acknowledged the importance of the context in which the word ‘specify’ appears:
The word chosen by the legislature for use in cl 20(2) of s 750 is "specify", a word which signifies precision. Even such a word must yield to context, since no word has a meaning which remains rigidly fixed, however it is used. A word is not a locked box with static contents; it is more like a living cell, changing as it responds to the environment, which is its context … the context of the clause suggests that unambiguous precision was exactly what the draftsman was striving to require.
314 In SZTAL v Minister for Immigration and Border Protection, Kiefel CJ, Nettle and Gordon JJ stated:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
315 Writing separately, Gageler J (as his Honour then was) stated:
The task of construction begins, as it ends, with the statutory text. But the statutory text from beginning to end is construed in context, and an understanding of context has utility “if, and in so far as, it assists in fixing the meaning of the statutory text”.
The constructional choice presented by a statutory text read in context is sometimes between one meaning which can be characterised as the ordinary or grammatical meaning and another meaning which cannot be so characterised. More commonly, the choice is from “a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural”, in which case the choice “turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies”
Integral to making such a choice is discernment of statutory purpose.
316 Focusing on the interpretation of ‘specify’ in different statutory contexts is apt to distract from the interpretive task. The word ‘specify’ must be read in its statutory context within the NEVA. That context informs the extent to which it is necessary for the Minister to specify an augmentation for the purposes of an order. The explanatory memorandum accompanying the introduction of s 16Y noted that the regulatory requirements imposed by the application of the RIT-T had the capacity to impede delivery of transmission infrastructure to address Victoria’s ‘urgent reliability needs’. Section 16Y of the NEVA was introduced in order to confer upon the Minister the power to disapply or modify the RIT-T in order to expedite augmentations to the transmission system.
317 Any augmentation, at the stage at which the RIT-T is being applied, will necessarily be at a preliminary stage of development. The RIT-T process involves the assessment of a variety of options to address an identified need, delineating those options that are credible from those that are not. The end process of the RIT-T process is the selection of a preferred option.
318 For example, the VNI West PADR describes the process of refinement that precedes the selection of a precise route for an augmentation:
A desktop land, planning and environmental feasibility analysis has been undertaken since the PSCR to better understand the existing and known conditions relevant to the credible options in this RIT-T assessment. AVP and Transgrid identified this analysis as a key step, usually not undertaken in this detail during the RIT-T process, in identifying and understanding relevant environmental and social values. Through this analysis, AVP and Transgrid identified a range of significant environmental, cultural and social constraints and opportunities, in the broad geographical area north of Ballarat up to the Victoria – New South Wales border and onto the Dinawan substation location in New South Wales, which may have significant impacts on the delivery of the credible options. These constraints were then designated as ‘no-go areas’, with avoidance measures being applied to the credible options and considered within the prepared cost estimates, to further enhance the accuracy of the estimates. AVP and Transgrid also identified areas that have previously been disturbed where potential impacts on existing and future land-use could be minimised, such as co-locating with existing linear infrastructure. The outcome of this process was the refinement of the broad geographic area to an ‘area of interest’.
If a project is confirmed through the RIT-T process, the development of a project route and the location of any proposed terminal stations will be determined through a rigorous route and site selection process, detailed design, and community and landholder consultation. As part of the future route determination exercise, this desktop analysis would be validated and undergo more focused assessments, surveys and discussions to further investigate environmental, cultural and social constraints and opportunities. This will allow the reduction of this area of interest to an ‘investigation corridor’.
The proposed route and associated infrastructure would also be subject to the requirements of the relevant planning and environmental approval processes. In support of these processes, the potential impacts associated with the construction and operation of VNI West would be further assessed. This includes working with landholders in the identified investigation corridor to gain a deeper understanding of the existing local constraints and opportunities for mutual benefits. The aim is to create a shared vision of the ideal route within the investigation corridor.
319 Mr Wood contends that the requirement to ‘specify’ in s 16Y(1)(a) imports an obligation which would ‘potentially’ require the Minister to designate the particular proposed route of an augmentation. To require the Minister to specify a proposed route would be inconsistent with the statutory scheme. As the above extract from the VNI West PADR illustrates, even following the completion of the RIT-T process, the specifics of a proposed transmission augmentation are far from finalised. As set out earlier in this judgment the area of interest for options 5 and 5A of the VNI West project ranged from 10 to 50 kilometres in width. Only after completion of the RIT-T process does a RIT-T proponent take further steps to ascertain the proposed route for an augmentation. That route may then be subject to further change following the assessment of planning and environmental considerations, as well as by the process of community consultation.
320 If the Minister were required to ‘specify’ an augmentation to the degree submitted by Mr Wood, the scheme of disapplication and modification envisaged by Parliament would be unworkable. It is inexplicable and improbable that Parliament, in conferring power upon the Minister to disapply the RIT-T process, would require the Minister to specify the augmentation in respect of which the RIT-T process is to be disapplied at a level of detail which would only arise after the application of the RIT-T process. Such an outcome would be inconsistent with the purpose of s 16Y of expediting transmission projects.
321 It is consistent with the NER for the Minister to identify an augmentation by reference to the identified need. The RIT-T process is premised on the concept of an identified need. This will necessarily be couched in high-level terms, so as to accommodate consideration of a number of credible options. Specification of an augmentation by reference to an identified need allows for modification of the RIT-T process as it applies to that identified need.
Specification of the VNI West Project in the February Order
322 The Alliance submits that the Minister did not adequately specify the VNI West project in the February Order. Clause 3 of the February Order designated the VNI West project in the following terms:
Specified augmentation – VNI West
The carrying out of all works to construct a new high-capacity transmission line between Victoria and New South Wales connecting the Western Renewables Link with Project Energy Connect to meet the identified need described in the VNI West PADR and VNI West PACR and all associated works, insofar as such works are an augmentation of the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act.
323 The Alliance submits that the specification of the VNI West project in the February Order suffered from the same uncertainties as the purported specification of the WRL Project and was therefore invalid. For the reasons set out above, I reject this submission.
324 Further, the Alliance submits that because the VNI West PACR did not exist at the time of the publication of the February Order, the reference to the ‘identified need described in the VNI West PADR and VNI West PACR’ is too uncertain. I reject this submission.
325 The reference to the VNI West PACR is an error in the drafting of the February Order. However, it does not follow that the February Order is invalid by reason of uncertainty. The VNI West PACR came into existence on 27 May 2023 when AEMO and Transgrid published the VNI West PACR immediately after the publication of the May Order. The drafting error does not invalidate the February Order. Absent the reference to the ‘VNI West PACR’, cl 3 of the February Order stipulates the ‘identified need’ as being that which is described in the VNI West PADR:
The identified need for the VNI West project has not changed since the 2020 ISP or Draft 2022 ISP:
To increase transfer capacity between New South Wales and Victoria to realise net market benefits by:
• efficiently maintaining supply reliability in Victoria following the closure of further coal-fired generation and the decline in aging generator reliability – including mitigation of the risk that existing plant closes earlier than expected,
• facilitating efficient development and dispatch of generation in areas with high quality renewable resources in Victoria and southern New South Wales through improved network capacity and access to demand centres, and
• enabling more efficient sharing of resources between NEM regions.
Ground 4 – Uncertainty
326 The Alliance submits that the February Order is invalid because it ‘contains elements so uncertain that they do not embody a valid exercise of the Minister’s power under s 16Y of the NEVA’.
327 King Gee Clothing Co v The Commonwealth (‘King Gee’) is authority for the proposition that delegated legislation will not be invalid on the ground of uncertainty unless it fails to comply with a standard of certainty prescribed by the statute which confers the power to make delegated legislation.
328 King Gee concerned wartime legislation that permitted a Commonwealth officer to make a regulation fixing the sale price for prescribed items of clothing. The regulation prescribed a method for calculating the price which involved a number of subjective factors. The plaintiff argued that the regulation was void for uncertainty. The High Court concluded that the regulation was invalid. Dixon J (as his Honour then was) stated:
I cannot see how this history warrants the courts in adopting as a general rule of law the proposition that subordinate or delegated legislation is invalid if uncertain. It appears to me impossible to qualify the power conferred on the Executive Government by ss. 5 and 13A of the National Security Act 1939 1943 by adding the unexpressed condition that regulations made thereunder must be certain. I should have thought that, in this matter, they stood on the same ground as an Act of Parliament and were governed by the same rules of construction. I am unaware of any principle of law or of interpretation which places upon a power of subordinate legislation conferred upon the Governor-General by the Parliament a limitation or condition making either reasonableness or certainty indispensable to its valid exercise. Our Constitution contains no due process clause and we cannot follow the jurisprudence of the United States by saying that uncertainty violates a constitutional safeguard.
329 His Honour then considered the text of the principal legislation:
It needs no imagination to see that in drafting an order for the fixing of prices for an important trade many difficulties must be encountered and it would be impossible to avoid ambiguities and uncertainties which are bound to arise both from forms of expression and from the intricacies of the subject. But it is not to matters of that sort that I refer. They depend upon the meaning of the instrument and they must be resolved by construction and interpretation as in the case of other documents. They do not go to power. But it is another matter when the basis of the price, however clearly described, involves some matter which is not an ascertainable fact or figure but a matter of estimate, assessment, discretionary allocation, or apportionment, resulting in the attribution of an amount or figure as a matter of judgment. When that is done no certain objective standard is prescribed; it is not a calculation and the result is not a price fixed or a fixed price. That, I think, means that the power has not been pursued and is not well exercised.
330 King Gee is authority for two propositions. First, there is no general law requirement for delegated legislation to meet a specified standard of certainty. A requirement of certainty, if any, must arise as a condition attaching to the statutory grant of power to make delegated legislation. Second, any ambiguity and uncertainty arising from delegated legislation is to be resolved in accordance with ordinary principles of construction.
Clause 6.1(a)
331 The Alliance submits that, by reason of uncertainty, cl 6.1(a) of the February Order is an invalid exercise of the power conferred on the Minister by s 16Y of the NEVA. Clause 6.1(a) states:
6.1 AEMO is conferred the following functions in respect of the specified augmentations:
(a) assessing alternate options to the preferred options described in the VNI West PADR and the WRL PACR to facilitate and expedite the development, delivery, construction and energisation of the specified augmentations or otherwise better meet a crucial national electricity system need in Victoria or in Victoria and another participating jurisdiction, including options in relation to:
(i) alternate routes, nodes, terminal stations and transmission network design,
(ii) other augmentations of the declared transmission system, and
(iii) changes to the WRL;
332 The Alliance submits that, as a consequence of the Minister’s failure to ‘prescribe any standard by reference to which the assessment of alternate options is to be conducted’, the February Order is too uncertain to constitute a valid exercise of the power under s 16Y. I reject this submission.
333 Any requirement of certainty affecting the validity of the February Order must derive from the terms of the NEVA. The power to make cl 6.1(a) of the February Order is governed by s 16Y(2)(d) of the NEVA, which prescribes particular matters which may be included in an order made under s 16Y(1):
Specify a test, examination or assessment to apply in relation to a specified augmentation or specified augmentation services in place of the regulatory investment test for transmission (an alternative regulatory investment test)
334 Further, the chapeau to 16Y(2) provides:
(2) Without limiting subsection (1)(d), (e), (f), (g) or (i), an Order under subsection (1) may do any one or more of the following:
335 Section 16Y(1) is the source of the Minister’s power to authorise AEMO to assess alternate options. Section 16Y(2)(d) prescribes, non-exhaustively, the manner in which the power to issue an order under s 16Y(1) may be exercised. Section 16Y(2)(d) does not impose a standard of certainty which, if not complied with, will render an order made under s 16Y(1) invalid.
336 In addition to the chapeau in s 16Y(2), there are two other features of the statutory scheme which tell against a requirement of certainty in the making of an order. First, s 16ZC(1) states that an order under s 16Y ‘has effect according to its tenor’. Second, an order under s 16Y may ‘confer functions and powers on, or leave any matter of thing to be decided by, AEMO’.
337 Further, even if s 16Y(2)(d) imposed a requirement of certainty, that standard is met by cl 6.1(a). The requirement that an assessment be specified in an order does not require the Minister to prescribe specific means by which an assessment must be undertaken. Section 16Y(2)(d) permits the Minister to ‘specify’ an ‘assessment to apply’. The February Order prescribes the nature of the assessment required by cl 6.1(a)
338 Clause 6.1(a) of the February Order confers a power on AEMO to assess options other than the preferred options identified in the VNI West PADR and the WRL PACR. The outcome to be achieved is that the option other than the preferred option will ‘facilitate and expedite the development, delivery, construction and energisation of the specified augmentations or otherwise better meet a crucial national electricity system need in Victoria or in Victoria and another participating jurisdiction’. AEMO is also required to assess the costs of the options assessed under cl 6.1(a). Clause 6.1(c) requires AEMO to consult with VicGrid in respect of any outcomes produced from the assessment under cl 6.1(a).
339 Clause 6.1(a) confers a function on AEMO as the RIT-T proponent and TNSP in Victoria. AEMO has the capacity to assess whether an option will ‘facilitate and expedite’ the specified augmentations ‘or otherwise better meet a crucial national electricity system need’. Its role as a TNSP involves identifying identified needs and discerning credible options to address those needs. This may be contrasted with the regulation in King Gee. There, the inherent uncertainty in the method prescribed by the regulation meant that ‘no trader, however careful, could be sure what would be held to be the maximum prices within which, under the severest penalties, he must sell his goods’. In contrast, under cl 6.1(a) there is a clear direction to AEMO, the resolution of which falls squarely within AEMO’s role as a TNSP.
340 The Alliance points to other matters which render the Order invalid for uncertainty. The first, the power in cl 6.1(a)(ii) which allows AEMO to assess ‘other augmentations of the declared transmission system’. Second, AEMO’s power in cl 6.1(a)(iii) to assess ‘changes to the WRL’. Third, the obligation in cl 6.9 to publish a PACR for VNI West with Transgrid, in circumstances where cl 6.8 disapplies the relevant rules establishing the meaning of a PACR. Fourth, the stipulation in cl 6.10 that deems the making of an order as not constituting a material change in circumstances.
341 The Alliance has failed to establish any nexus between these four uncertainties and a requirement for certainty imposed by the NEVA. In order to make good the proposition that the February Order is invalid on the ground of uncertainty, the Alliance must show that the aspects of cl 6 which it contends are uncertain fail to meet a standard of certainty prescribed by the NEVA. It has failed to do this.
Conclusion
342 The Alliance’s application is dismissed. I shall provide the parties with an opportunity to make submissions as to the costs of the proceeding. My provisional view is that the Alliance should pay the Minister’s costs of the proceeding, including reserved costs, on a standard basis, to be taxed in default of agreement.
Annexure A: Joint Glossary
Annexure B: February Order and Reasons
Annexure C: May Order and Reasons
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