If the Australian Energy Regulator's final decision on APA Group's (ASX:APA) application to regulate Basslink mirrors its draft decision, APA could see an increase in near-term earnings, Jarden Research said in a Tuesday note.

On Monday, the regulator issued a draft decision rejecting the company's application to convert Basslink, an undersea electricity interconnector between Tasmania and Australia, from a contracted market network service provider (MNSP) to a regulated transmission network service provider.

The energy infrastructure company said that if the draft decision is confirmed, it plans to operate Basslink as a non-contracted MNSP after its current revenue contract with Hydro Tasmania ends on June 30, 2025.

Jarden Research noted that this will increase charges for the use of Basslink ahead of any competitive threat from the proposed Marinus Link, an electricity and data interconnector between Tasmania and Victoria, jointly owned by the Australian, Tasmanian, and Victorian governments.

However, the broker expects a decrease in medium-term earnings once the proposed Marinus Link interconnector is built in 2028.

Jarden Research maintained its overweight rating on APA Group and lowered its price target to AU$8.30 from AU$8.45.

Shares of APA Group rose nearly 2% in recent Friday trade.