The Australian Energy Regulator (AER) announced on Friday that 'Project EnergyConnect' and its proposed 900-kilometre interconnector had passed an "economic cost-benefit analysis...to ensure affordable and reliable energy for consumers".

TransGrid operates power networks in NSW while ElectraNet performs a similar role in SA.

A TransGrid statement said Project EnergyConnect's construction was is due to start in mid-2021 and be fully commissioned by 2023.

"It will provide 800 regional jobs during construction and a 700 ongoing jobs," the statement said.

The company said projects aim was to "lower wholesale energy costs and support growth in renewable energy generation".

In August, the NSW government declared the Project EnergyConnect as Critical State Significant Infrastructure.

The project calls for a power line between Wagga and Robertstown in SA via Buronga.

Wagga City Council has previously voiced support for the project and the jobs it could bring to the Riverina while NSW Wagga MP Joe McGirr has said the project should bring down power prices by adapting the grid to renewable energy sources.

Numerous solar farms are being developed around Wagga and the federal government is constructing the Snowy 2.0 scheme to store power via pumped hydroelectricity.

AER said passing the Regulatory Investment Test for Transmission (RIT-T) was "a necessary step in the regulatory approval process to enable the costs of the project to be recovered from consumers".

TransGrid chief executive Paul Italiano said his company, together with ElectraNet, were "committed to delivering the project at the lowest possible cost with the greatest benefit to energy consumers".

"We are continuing to advance the project and will lodge a Contingent Project Application (CPA) later this year."

TransGrid and Electranet have started preliminary works on the project, including preparations for cultural and geo-technical surveys and will work together on the submission of the CPA.

TransGrid on Friday announced it has shortlisted three bidders for the design and construction of the NSW section to be built from the South Australian border to Wagga with the tender to start next month.

CPB Contractors and UGL Engineering, Elecnor Australia and Seymour Whyte Constructions and Quanta Power Australia were the shortlisted bidders.