The Australian Energy Regulator (AER) today released its draft decisions on the revenue proposals submitted by ACT and NSW distribution and transmission businesses, for the period commencing on 1 July 2015.
The draft decisions apply to:
- ActewAGL for the period 2015–19;
- Ausgrid, Endeavour Energy and Essential Energy for the period 2015–19;
- Jemena Gas Networks (NSW) for the period 2015–20;
- TransGrid for the period 2015–18 and Directlink for the period 2015–20.
The transmission and distribution businesses share the delivery of energy to consumers across these two states. In the draft decisions, the AER has proposed lower allowed revenues to the businesses (33% to 35% lower than the proposals of the distribution businesses, and 23% to 24% lower than the proposals of the transmission businesses). The AER anticipates that these reductions will result in lower prices for consumers.
In arriving at these draft decisions, which are the first of their kind under the new National Electricity and Gas Rules, the AER has used cost benchmarking for the first time to determine cost allowances. The distribution and transmission businesses now have a short time to respond to the draft decision before the AER makes final determinations in April and May 2015. Regulated networks in other states will be watching the outcomes closely.
Frontier Economics (Australia) regularly advises clients in the energy sector, including the AER and energy businesses.
For more information, please contact Marita O’Keeffe on m.okeeffe@frontier-economics.com.au or phone +61 3 9620 4488.