Energy companies welcome win over regulator

Energy companies have been thrown a lifeline in their battle against an Australian Energy Regulator (AER) ruling that would force them to slash household energy bills.

The AER ruling reduced the amount the three state-owned network businesses, Ausgrid, Endeavour Energy and Essential Energy can recover from consumers.

But the Australian Competition Tribunal today found there were errors in the way the regulator arrived at its ruling, and has handed the matter back to the AER to re-work the decision.

The determination could affect how much money the Government is able to raise from the long-term lease of Ausgrid, which is expected to be finalised later this year.

The Tribunal said the most significant finding was the AER must use a broader range of modelling and benchmarking against Australian businesses when it considers the suppliers’ operating expenses, as reported by ABC News.

The Energy Networks Association (ENA) has welcomed the decision, with CEO John Bradley saying it provides important clarification to the AER, networks and other stakeholders about how national energy rules should be applied to serve the long-term interests of consumers.

“Under the law, the Tribunal can only amend an AER determination if it finds there is a ‘materially preferable’ decision that would deliver a better outcome for customers,” Mr Bradley said.

“Future decisions should be simpler because of these judgements and this is an important outcome for customers and all stakeholders.

”Merits review plays an important role in ensuring regulation delivers the right outcomes for customers, including ensuring safety, reliability and efficiency.”

Network businesses strongly support the use of economic benchmarking as a tool to drive efficiencies provided the models are transparent and based on robust data.

“The merits appeals took place under amended laws and rules that were revised to strengthen community confidence in the price setting framework delivering balanced results. The reforms have seen greater consumer participation in these reviews,” Mr Bradley said.