Eastern States Price Determinations – Electricity Transmission

Access Arrangements & Price Determinations

Feb 24
Eastern States Price Determinations – Electricity Transmission

PowerLink (2017-2022) – QLD

On 28 January 2016, PowerLink submitted its regulatory proposal to the Australian Energy Regulator (AER).  This proposal anticipates that actual capital and operating costs in the last two years of the current regulatory period will be significantly lower than the AER’s ‘allowable’ levels as shown in the table below (real $m 2016/17).

Expenditure and year AER ‘allowable’ level ($m) Revised forecast level ($m)
Capex 2015/16 478.8 159.8
Capex 2016/17 555.6 211.3
Opex 2015/16 211.7 223.1
Opex 2016/17 216.5 216.1

In the current regulatory period, capital expenditure is forecast to be 52% ($1.4bn) lower than the regulated allowable level and operating expenditure is anticipated to be 1.4% (13.6m) lower than allowed by the AER.

For the new regulatory period PowerLink is forecasting a total capital expenditure of $957.1m, an average of $191.42m per annum.  This represents a 31% reduction in capital expenditure over the current regulatory period.  PowerLink has attributed much of this reduced capital expenditure to significant forecast reductions in demand growth that has enabled it to defer capital expenditure projects.

For operating expenditure, PowerLink is forecasting a total expenditure of $976.7m, an average of $195.34m per annum. This represents a 7% reduction in operating expenditure over the current regulatory period.

In its proposal, PowerLink is proposing labour and materials escalation rates and a cost of capital (6.04%) in line with current determinations made by the AER.  Powerlink is also assuming low output growth and a productivity factor (operating efficiency) of 1.2% per annum.

The AER is holding a public forum in Brisbane on 15 March 2016 and interested parties have until 28 April 2016 to provide submissions on the regulatory proposal.

TransGrid (2018-2023) – NSW

In December 2015, the AER published its decision to replace the Framework and Approach for TransGrid’s next regulatory determination for the period 1 July 2018 to 30 June 2023.  This follows a request from TransGrid in late October last year asking that the information on incentive schemes is revised to reflect current schemes.   The AER has until 30 July 2016 to publish its final Framework and Approach prior to the start of the next regulatory determination.

The AER has another open electricity transmission price determination, for AusNet in Victoria, this is awaiting the AER’s final decision.