NIS Again: SA’s Interconnector


I coined the phrase ‘Numeric Incompetence Syndrome’ a while back, and yesterday an article in my local newspaper delivered another glaring example. In summary…

South Australia’s connection to the national electrical grid is to be enhanced with a new 900km interconnector to New South Wales and Victoria. The capital cost is expected to be $1.53 billion. The article states: “To cover that, households would pay $9 a year in SA and $5 in NSW.”

Assuming an average household size of 2.7 persons (as in 2016 nationally), there are about 0.65 million households in SA and 3.11 million in NSW. So the total annual amount recovered from households would be ($9 x 0.65M) + ($5 x 3.11M) = $21.4 million. Even allowing for future population growth, this comes nowhere near “covering” an investment of $1.53 billion: to amortise such a sum over a 20-year life at a discount rate of 5%pa would cost $123 million per year, before considering any maintenance costs. So that’s error No.1.

The article goes on to say, “[ElectraNet] estimates the project would deliver overall benefits of $924 million over 20 years…” but adds that “the Australian Energy Regulator … has downsized the project’s 20-year benefit to $269 million.”

Who, in their right mind, would invest $1.53 billion in something that will deliver benefits of only $924 million over 20 years?! How can any sub-editor not see that this cannot be true?! Perhaps the word “net” was omitted, but surely “overall” was inserted to make clear that the writer means gross benefits.

My stroppiness is going off the scale. Journalism is not just about regurgitating people’s press releases; it has to involve some critical thought, some fact-checking, some exercise of common sense for heaven’s sake!

I have emailed the Editor of the newspaper with a link to this post and an invitation to respond and/or to publish a correction.