AER issues final decisions for Victorian electricity distributors

Access Arrangements & Price Determinations

May 28
AER issues final decisions for Victorian electricity distributors

On 26 May, the Australian Energy Regulator (AER) announced its final decisions on regulated revenues for the five companies that run Victoria’s electricity networks; SP AusNet, CitiPower, Jemena, Powercor and United Energy.  The approved network charges will apply from 1 January 2017.

The AER reported that the decisions “lock in consumer savings on household electricity bills by between $50 and $120 over the 2016-20 period.”  This is attributed to reducing estimated revenue by $2.3bn from that proposed by the network service providers.

Two of the key drivers behind the revenue reductions were named as lower metering costs following completion of the smart meter roll-out programme and improved financial market conditions compared to the last price determinations in 2010.

The AER’s review process and final decisions have incorporated and increased level of public consultation following recommendations in the Better Regulation programme of 2013/14 that was initiated after changes to the National Electricity and Gas Rules published by the Australian Energy Market Commission in November 2012.

Key aspects of the final decisions are outlined below.

Network business Revised revenue proposal

($million)

AER final decision

($ million)

Percentage difference Cost of capital Estimated average reduction in residential bill ($)
SP AusNet $3835.5 $3130.4 -18.4% 6.31% (8.66%) -$98
Citipower $1847.8 $1500.3 -18.8% 6.11% (8.61%) -$50
Jemena $1538.2 $1302.1 -15.3% 6.37% (8.62%) -$120
Powercor $3818.0 $3176.4 -16.8% 6.11% (8.61%) -$62
United Energy $2551.2 $2106.1 -17.4% 6.37% (8.7%) -$54