Eastern States Price Determination – Electricity Distribution Networks

Access Arrangements & Price Determinations

Dec 11
Eastern States Price Determination – Electricity Distribution Networks

Updated information on the Australian Energy Regulator’s (AER) price determinations for electricity distribution network service providers.

ActewAGL (2014-2019) – ACT

ActewAGL submitted a revised regulatory proposal on 20 January 2015.  The AER published its final decision on 30 April 2015 which delivered a 31.5% reduction in allowable revenue.  This resulted from a lower cost of capital, a 35% reduction to forecast operating expenditure and a 10% reduction in forecast capital expenditure.

In response (May 2015), ActewAGL applied to the Australian Competition Tribunal for a merits review and applied to the Federal Court for judicial review of the AER’s final 2014-19 distribution determination. The Tribunal hearings commenced in Sep 2015.

Energex (2015-2020) – QLD

The AER published its final decision on 29 October 2015.  This final decision accepted Energex’s forecast operating expenditure and most of its forecast capital expenditure.  However, the forecast rate of return or cost of capital was reduced from 7.42% (proposed by Energex) to 6.01%.  This key change has reduced allowable revenue over the regulatory period by 16.2%.  Consequently, residential customers will see (if the reductions are passed through) a reduction of $17 (-1.2%) to the annual average residential bill in 2016/17, followed by reductions of $21, $17 and $14 in subsequent years.

Ergon Energy (2015-2020) – QLD

The AER published its final decision on 29 October 2015.  This final decision reduced the forecast rate of return from 7.41% (proposed by Ergon) to 6.01%, reduced forecast operating expenditure by 4.5% and forecast capital expenditure by 12.9%.  These key reductions lowered allowable revenue over the regulatory period by 19.3%. Consequently, residential customers will see (if reductions are passed through) a reduction of $17 (-1.2%) to the annual average residential bill in 2016/17, followed by reductions of $21, $17 and $14 in subsequent years.

SA Power Networks (2015-2020) – SA

The AER published its final decision on 29 October 2015.  This final decision reduced the forecast rate of return from 7.09% (proposed by SA Power Networks to 6.17%, reduced the depreciation allowance by 11.8%, reduced forecast operating expenditure by 11.9% and forecast capital expenditure by 10.9%.  These key reductions lowered allowable revenue over the regulatory period by 15.4%.  Residential customers will continue to see average electricity bill remain below the 2014/15 level for the next five years.

Jemena (2016-2020) – VIC

Jemena submitted its regulatory proposal to the AER on 30 April 2015 and the AER published its preliminary decision on 29 October 2015.  This was followed by a public forum was held on 17 November 2015.  Interested parties are requested to return submissions on the preliminary decision to the AER by 6 January 2016.

The preliminary decision reduces overall recoverable revenue by 17.5% via reductions in the cost of capital, set at 6.02% against the 7.18% proposed by Jemena.  Forecast operating costs and capital costs were also reduced by 21.8% and 5.3% respectively.

Jemena can submit a revised regulatory proposal by 6 Jan 2016 and the AER is expecting to release its final decision towards the end of April 2016.

SPAusNet (2016-2020) – VIC

SPAusNet submitted its regulatory proposal on 30 April 2015, following which the AER published its preliminary decision on the proposal on 29 October 2015.  A public forum was held on 17 November 2015 and interested parties are requested to return submissions on the preliminary decision to the AER by 6 January 2016.

The preliminary decision reduces overall recoverable revenue by 19.3% via reductions in the cost of capital, set at 6.1% against the 7.19% proposed by SPAusNet.  Forecast operating costs and capital costs were also reduced by 11.4% and 13% respectively.

SPAusNet can submit a revised regulatory proposal by 6 January 2016 and the AER is expecting to release its final decision towards the end of April 2016.

United Energy (2016-2020) – VIC

United Energy submitted its regulatory proposal on 30 April 2015 and the AER published its preliminary decision in response on 29 October 2015.  This was followed by a public forum on 17 November 2015.  Interested parties are requested to return submissions on the preliminary decision by 6 January 2016.

The preliminary decision reduces United Energy’s overall recoverable revenue by 20.9% via reductions in the cost of capital, set at 6.12% against the 7.38% proposed by United Energy.  Forecast operating costs and capital costs were also reduced by 16.9% and 26.2% respectively.  United Energy can submit a revised regulatory proposal by 6 January 2016 and the AER is expecting to release its final decision towards the end of April 2016.

Powercor (2016-2020) – VIC

Powercor submitted its regulatory proposal on 30 April 2015 and the AER published its preliminary decision on the proposal on 29 October 2015.  A public forum was held on 17 November 2015 and interested parties are requested to return submissions on the preliminary decision by 6 January 2016.

The preliminary decision reduces overall recoverable revenue by 15.5% via reductions in the cost of capital, set at 6.02% against the 7.2% proposed by Powercor.  Forecast operating costs and capital costs were also reduced by 12.5% and 19.7% respectively.  Powercor can submit a revised regulatory proposal by 6 January 2016 with the AER expecting to release its final decision towards the end of Apr 2016.

CitiPower (2016-2020) – VIC

CitiPower submitted its regulatory proposal on 30 April 2015 and the AER published its preliminary decision on the proposal on 29 October 2015.  A public forum was held on 17 November 2015 and interested parties are requested to return submissions on the preliminary decision by 6 January 2016.

The preliminary decision reduces overall recoverable revenue by 17.6% via reductions in the cost of capital, set at 6.02% against the 7.2% proposed by Citipower.  Forecast operating costs and capital costs were also reduced by 17.5% and 22.3% respectively.  Citipower can submit a revised regulatory proposal by 6 January 2016 with the AER expecting to release its final decision towards the end of April 2016.