On 25 November 2013 the AER received a pass through application from Energex, the electricity distributor for south east Queensland. The pass through application relates to higher than forecast feed–in tariff payments made during the 2012–13 regulatory year. These payments were made under the Queensland Government’s Solar Bonus Scheme. The AER assessed Energex's pass through application in accordance with clause 6.6.1 of the National Electricity Rules (NER) and the determination currently applying to Energex. On 17 December 2013, the AER released its determination on Energex's pass through application. The AER determined that $185.6 million is the approved pass through amount.
Background
Under the Solar Bonus Scheme, owners of solar panels are paid by retailers for electricity they supply to the network. Retailers recover these payments from the relevant distributor. In this case the distributor is Energex. In turn, Energex recovers these costs from its customers.
When the last regulatory determination for Energex was made in 2010, the rapid uptake of solar panels was significantly underestimated by both Energex and the AER. However, it was understood at the time that there was uncertainty around the accuracy of those forecasts. In determining the amount Energex would be required to recover for feed-in tariff payments, the AER accepted forecasts submitted by Energex subject to inclusion of a true up mechanism. Consequently, Energex’s regulatory determination also includes a cost pass through mechanism for Solar Bonus Scheme costs. Under this mechanism, Energex may apply to the AER to pass through to its customers any costs above the allowance already included in the determination.
For the 2012-13 regulatory year, the AER approved in its determination in 2010 a Solar Bonus Scheme allowance of around $7.6 million. Actual costs incurred by Energex in 2012-13 were much higher. In its cost pass through application to the AER, Energex proposed a positive pass through amount of $185.6 million.
What this means is that in 2014-15 Energex will be permitted to raise additional revenue to meet the approved pass through amount incurred in 2012-13. The additional revenue represents an increase of around 11% compared to Energex’s original revenue requirement in 2014-15. Energex can recover these revenues from customers through higher network charges to apply from 1 July 2014.
This is not the first time the AER has been required to assess a proposed cost pass through submitted by Energex for the Solar Bonus Scheme. For the previous (2011-12) regulatory year, the approved pass through value was $78.6 million. For 2010-11, the approved pass through amount was $17.1 million.
Solar Bonus Scheme costs are not the only driver of changes in electricity prices. Other factors include the cost of maintaining or enhancing electricity supply networks, the cost of other schemes established at a state or national level, and the cost of generating electricity.