AER reveals draft decisions on big distributors

AER

The AER has today issued draft determinations on the amount of revenue Ausgrid, Essential Energy and Endeavour Energy can recover from consumers in the next regulatory period (201924).

AER board member Jim Cox said the key focus of the five-yearly reviews is on ensuring that consumers pay no more than necessary for safe and reliable electricity.

All three companies have achieved, or are on track to achieve, the operational efficiencies we set in our 2015 decisions. Consumers will continue to benefit from these lower levels of operating costs into the next regulatory period,” Mr Cox said.

We have arrived at the draft decisions after significant consultation with networks and consumers not only since the networks submitted their proposals, but crucially, in the lead up to their submission. This has been a process of deep engagement on all parts.

The network tariffs set under this determination make up around one third of the average electricity bill in NSW. If the other components of the bill were to remain unchanged the AER estimates that by 2024 an average household’s annual electricity bill will be:

  • $44 lower on Ausgrids network
  • $6 higher for Endeavour Energys network
  • $70 higher for Essential Energys network.

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These draft decisions include a rate of return based on the AERs current draft rate of return guideline (as set out in July 2018), which is still in the process of being finalised. The final decision on the new rate of return will be completed in time to be incorporated into the final decisions for the NSW networks at the end of April 2019.

Aside from setting a placeholder rate of return figure that differs from that proposed by Essential Energy, the AER has largely accepted its revenue proposal, which reflected Essential Energys extensive consultation prior to submission.

For Endeavour Energy and Ausgrid, Mr Cox identified a number of other areas where the companies proposals were not fully accepted by the AER.

Endeavour Energy revised its forecast capital expenditure from what was originally submitted after both the AER and consumers groups raised concerns,” he said. “We have accepted this lower forecast in our draft decision.

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Ausgrid has proposed to reduce its capital expenditure in the next regulatory period, but a number of areas remain where the business has not fully justified its proposal. We expect Ausgrid will provide us with further information on its capital expenditure in its revised proposal.”

Revised proposals from all three businesses are expected by January 8, 2019. Submissions from stakeholders on both these draft decisions and the business revised proposals are invited by February 5, 2019. Final determinations will be made by April 30, 2019.