One of Australia’s biggest wind farms is under threat of becoming a $750 million white elephant after plans to spend $22 million connecting it to the power grid were rejected as flimsy.
The Economic Regulation Authority denied Western Power’s bid for $21.7 million of taxpayers’ money to build transmission works to the massive Collgar wind farm, near Merredin.
The State’s economic watchdog refused the application on grounds that Western Power was asking for the money based on an outdated business case.
“We haven’t got enough information in front of us to enable us to determine whether or not this is being built efficiently,” authority chairman Lyndon Rowe said.
Mr Rowe said that because of the shortcomings of Western Power’s submission, the ERA had to assume that a private competitor would be able to build the substation and power lines for less.
It leaves the landmark project, which will cover an area 10 times the size of Kings Park and generate enough power for 125,000 homes, potentially stranded.
With construction of Collgar’s 111 turbines almost half complete, there were questions over whether the project could start delivering some of its 206-megawatt capacity into the grid by late May or June, as had been planned.
Western Power said it would challenge the ERA’s determination, arguing that the proposal was justified economically.
Western Power denied the ERA’s knockback was a setback and said “this is part of the normal regulatory discussion that surrounds any new facilities investment test”.
The utility said that it would need to bring forward extra information to satisfy the watchdog’s concerns.
A spokesman for Collgar, which is backed by Australia’s four major banks as well as international creditors, admitted the ERA’s draft ruling had come as a surprise.
He said it was too early to determine whether the decision would have an impact on the project’s start-up timing or security but insisted construction would push ahead as scheduled.