The Australian Energy Regulator (AER) has issued its draft decision for SA Power Networks’ revenue for the 2020-2025 period, with SA Power Networks saying the determination was “disappointing”.
While SA Power Networks recognised the AER accepted a number of the company’s plans including work to ensure the network can support the integration of more solar, batteries and electric vehicles, it’s concerned the regulator doesn’t understand the specific challenges of managing SA’s ageing network.
AER’s draft decision allows SA Power Networks to recover $3 905.3 million from its customers for the 2020-2025 period.
This is $309.2 million less than the $4 214.5 million SA Power Networks proposed.
“If the AER draft decision stands we will spend 20 per cent less in the next five years on replacing aging assets than we invested in 2015-2020,” SA Power Networks said in a statement.
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“We don’t believe that this is sustainable for a network of the scale and age of South Australia’s and it will make it more difficult to maintain reliability and safety. It also will push increasing costs on to customers in the future.
“Had the AER accepted our proposal in full for a measured ongoing replacement of ageing assets, it would add about $3 per annum to the bill of a residential customer.
“We also are disappointed, as are some of our stakeholders, that the AER has not supported a plan to improve reliability of some of our worst-performing power lines mainly in regional locations including the Eyre Peninsula and Adelaide Hills.”
SA Power Networks says its future revenue plans were developed after extensive engagement with customers, stakeholders and the community with three key priorities: keeping prices down, maintaining safety and reliability, and transitioning to the new energy future.
AER Acting Chair Jim Cox welcomed the engagement that SA Power Networks has had with its consumers, but says more consumer engagement needs to be had as part of the revised proposal.
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“Our concern is to ensure that consumers pay no more than necessary for a safe and reliable electricity supply and that projects are delivered as efficiently as possible.
“We have asked SA Power Networks to engage further with consumers on their concerns and provide us with more information to justify its expenditure proposals.”
SA Power Networks will submit a revised proposal in December.