Australia's Basslink HVDC Link Set for Regulated Future
The Australian Energy Regulator (AER) has published its final revenue determination for the Basslink HVDC cable, approving AU$459.5 million in recoverable revenue for the 2026–30 regulatory control period. The decision, announced on 27 February 2026, marks a shift in how the interconnector will operate within Australia's National Electricity Market (NEM).
Basslink is a 370 km HVDC undersea cable linking Loy Yang in Victoria to George Town in Tasmania. It is currently the only electricity interconnector between the two states, and uniquely, the only unregulated interconnector in the NEM. As an unregulated asset, Basslink has operated as a Market Network Service Provider (MNSP), generating revenue by trading electricity in the spot market and capitalising on price differences between the two regions. Under the new framework, it will become a regulated Transmission Network Service Provider (TNSP), operating as an open link where energy flows are governed by market efficiency rather than a commercial bidding strategy.
APA Group, which acquired Basslink in late 2022, submitted its initial revenue proposal in September 2023 and provided updates in August 2025 following extensive stakeholder consultation. The AER issued a draft determination in September 2025, proposing a lower figure of AU$428.8 million. APA submitted a revised proposal in November 2025, and following further submissions, the AER issued its final determination at the higher figure of AU$459.5 million.
AER Chair Clare Savage said the regulator had carefully examined the opening regulatory asset base, as well as capital and operating expenditure, to ensure the approved revenue is prudent and efficient. She noted that when approving Basslink's conversion to regulated transmission services, the AER had considered its critical role supporting energy security, and that the reliability of Basslink underpins the benefits of regulation for consumers.
Basslink's costs had previously been recovered under a contract with Hydro Tasmania, which expired on 30 June 2025. Under the new arrangement, costs will be recovered from network users. Basslink has proposed a 75:25 cost-sharing split between Victoria and Tasmania. Based on this allocation, the AER estimates that Victorian residential customers will see an indicative annual bill increase of around AU$10 in 2026–27, while Tasmanian residential customers face an increase of around AU$25 in the same year, followed by a AU$1 annual rise for the subsequent three years.
APA Group CEO and Managing Director Adam Watson welcomed the outcome, saying it provides long-term certainty for both energy consumers and APA investors. He noted that Basslink remains the only electricity interconnector between Tasmania and Victoria and will continue to play a central role in supporting energy security across both states.
For the transition to take effect, APA Group must exercise its option to reclassify Basslink's registration with the Australian Energy Market Operator (AEMO) from an MNSP to a TNSP. Should APA proceed, Basslink will cease trading as a market participant on 30 June 2026 and commence operation as a regulated transmission service from 1 July 2026.
