Regulators urged to hold firm against network claims

Energy users have urged the Australian Energy Regulator (AER) to strongly refute claims being made by New South Wales energy distribution networks regarding the impacts of the AER’s Draft revenue determinations.

While there are aspects of the AER’s Draft Determinations the Energy Users Association of Australia (EUAA) disagrees with, AER CEO Phil Barresi said he acknowledges the regulator is taking a more proactive stance to reduce electricity prices.

“The determinations pave the way to putting an end to NSW large energy users being held captive to unsustainable, skyrocketing and unsatisfactory costs,” he said.

Speaking at the release of the EUAA submission on the AER Draft Determinations, Mr Barresi praised the regulator for stepping up to claims by the networks their revenue proposals are insufficient for their needs.

The EUAA submission makes reference to the NSW networks’ claims in response to the AER draft determinations on the financial sustainability, safety and reliability of their operations; claims it describes as “unsubstantiated, emotive and exaggerated”.

“The NSW DNSP’s have had it far too good, for far too long,” Mr Barresi said.

“Our analysis shows the NSW DNSPs reap extraordinary returns, well in excess of the returns achieved by Australia’s best performing ASX50 entities. Staggeringly, these returns are being achieved despite the NSW networks being amongst the least efficient in the National Electricity Market.

“The NSW networks’ claims are littered with inaccuracies and fallacies. For example, labour costs should be reducing, not increasing. How does an industry that is contracting because of declining demands for its services incur labour price increases that exceed CPI?”

EUAA analysis shows since 2007 Australia has recorded the world’s highest increases in electricity prices, placing it among the highest in the world.

Despite welcoming the AER determinations as a step in the right direction, the EUAA has urged the AER to reduce determinations even further, with Mr Barresi saying a 20 per cent reduction on energy costs could be achieved if the association’s recommendations were adopted.