Qualitative Summary Table 6 shows that the results of the qualitative commercial models assessment. The MNSP scenario (Base Case 1) generates the greatest risk transfer and utilisation, though this comes at the expense of funding suitability, whereas the dual regulated scenario (Alternative Case 3) offers the greatest suitability for funding, though this comes at the expense of risk transfer and utilisation of the second interconnector. Table 6: Qualitative Score Summary Criteria Importance Base Case 1 Base Case 2 Alt. Case 1 Alt. Case 2 Alt. Case 3 Hybrid Case 1 Hybrid Case 2 Both MNSP’s – Basslink MNSP, 2IC Basslink Regulated, Both MNSP’s Commercial Both Regulated Partially MNSP Partially Regulated Regulated 2IC MNSP Restrictions on 2IC Risk Transfer High Operational Utilisation Medium Energy Security Medium Suitability for Funding Low Financing Costs Medium Market Appetite High Score 10 8 12 7 12 8 14 Weighted Score 23 19 24 24 24 16 29 The Hybrid Case 2 model ranks highest as it takes the best parts of the regulated model (a minimum transmission charge to support funding), whilst transferring some MNSP revenue risk exposure to incentivise asset utilisation and enable higher investor returns. The ability of this model to generate further returns (over and above the transmission charge) provides an additional benefit of incentivising asset owners to ensure the link is utilised, as they are able to share a portion of the arbitrage revenues that they otherwise wouldn’t in a traditional regulated model.
Qualitative Summary Table 6 shows that the results of the qualitative commercial models assessment. The MNSP scenario (Base Case 1) generates the greatest risk transfer and utilisation, though this comes at the expense of funding suitability, whereas the dual regulated scenario (Alternative Case 3) offers the greatest suitability for funding, though this comes at the expense of risk transfer and utilisation of the second interconnector. Table 6: Qualitative Score Summary Criteria Importance Base Case 1 Base Case 2 Alt. Case 1 Alt. Case 2 Alt. Case 3 Hybrid Case 1 Hybrid Case 2 Both MNSP’s Both MNSP’s – Commercial Restrictions on 2IC Basslink MNSP, 2IC Regulated Basslink Regulated, 2IC MNSP Both Regulated Partially MNSP Partially Regulated Risk Transfer High Operational Utilisation Medium Energy Security Medium Suitability for Funding Low Financing Costs Medium Market Appetite High Score 10 8 12 7 12 8 14 Weighted Score 23 19 24 24 24 16 29 The Hybrid Case 2 model ranks highest as it takes the best parts of the regulated model (a minimum transmission charge to support funding), whilst transferring some MNSP revenue risk exposure to incentivise asset utilisation and enable higher investor returns. The ability of this model to generate further returns (over and above the transmission charge) provides an additional benefit of incentivising asset owners to ensure the link is utilised, as they are able to share a portion of the arbitrage revenues that they otherwise wouldn’t in a traditional regulated model.
feasibility-second-tas-interconnector-final-report-app-e_financial_and_commercial_analysis-2016.docx