New report assesses electricity networks’ performance

essential energy, electricity networks, powerlines, REFCL, Powercor

The performance of electricity networks’ poles and wires is improving across the National Electricity Market (NEM) and consumers are now paying less for the transportation of electricity, a new report from the Australian Energy Regulator (AER) shows.

AER Chair Clare Savage said the 2020 Electricity Network Performance Report indicated that network performance was improving over time and delivering for consumers.

“We welcome these findings that demonstrate consumers are getting a more reliable supply of electricity and the amount they pay for network services has generally declined since 2015,” Ms Savage said.

“Sufficient network returns are also important to attract investment and our analysis of recent market evidence and asset sales suggests that regulated energy networks are still regarded as attractive investments.

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“We will continue to build on this work in future reports to consider emerging issues such as changes in the way energy is produced and consumed. This will help us and stakeholders to be confident that network regulation continues to evolve and serve consumers’ long term interests,” Ms Savage said.

The report provides an analysis of the performance of transmission and distribution electricity networks across a core set of measures, including profitability. The report focuses on the jurisdictions in the NEM – New South Wales, Victoria, Queensland, South Australia, Tasmania, Australian Capital Territory, and the Northern Territory.

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Key findings for the period include:

  • The amount consumers are paying for network services generally declined since 2015, largely driven by reductions in allowed rates of return determined by the AER and driven by lower interest rates. The rate of return makes up about 50 per cent of a network business’ allowed revenue.
  • Market evidence suggests that investors continue to view allowed returns as being at least sufficient to attract investment.
  • Network reliability has improved over recent years, both in terms of frequency and duration of network outages.

The report is based on network data up to the end of 2019. The impact of the COVID-19 pandemic on network performance is not yet clear, but the AER is monitoring this closely. This will be a focus of the 2021 report.

This is the first report on network performance since 2015, and will become an annual publication. Next year there will also be performance reporting on fully regulated gas pipelines.