AER report shows improvement in electricity network productivity

The Australian Energy Regulator’s annual benchmarking reports for electricity distribution and transmission have shown an improvement in electricity network productivity in 2015.

The benchmarking reports compare the productivity of network businesses and track changes over time.

The AER’s benchmarking analysis shows that most network businesses have improved their productivity.

Distribution networks in the ACT, South Australia, Tasmania and Victoria have all improved their productivity, while the transmission networks in South Australia and Tasmania have also improved.

“Our benchmarking reports show differences in the productivity of the distribution businesses. Generally the Victorian and South Australian businesses are the most productive. Comparatively, the NSW, ACT and Queensland businesses do not perform as well,” AER Board member Jim Cox said.

The reports indicated NSW and Queensland distributors are not performing as efficiently as they could be.

“We understand some of the NSW and Queensland businesses are undergoing reforms, leading to increased costs in the short-term,” Mr Cox said.

“These reforms should contribute to improved productivity in the future, for the NSW and Queensland networks.”

Tasmanian network productivity has also improved, thanks to the merger of TasNetworks’ transmission and distribution businesses in 2014.

The overall benchmarking measures are part of the suite of tools the AER uses to assess the efficiency of network businesses, and form part of the ongoing process of refining the regulatory approach.

“The benchmarking work is critical in helping us determine the amount of money network businesses can recoup from customers, via network charges, through their energy bills,” Mr Cox said.

Energy Networks Australia Chief Executive Officer, John Bradley, said Australian networks were focussed on better service and more efficient outcomes for customers.

“Australia’s energy sector is going through a dynamic period of change and electricity networks are focused on driving efficiency and value for money across their services,” Mr Bradley said.

Mr Bradley welcomed the recognition in the report that external operating factors – which can be as simple as heavier than average rainfall, additional bushfire safety obligations or restructuring costs – can significantly impact overall network productivity results.