The AER’s decision is to approve cost pass through amounts for three natural disaster events which occurred in Queensland in December 2023 and January 2024, as detailed below. This will allow Energex and Ergon Energy to recover these amounts through network charges over the next two years:
- Energex (South East Queensland storms): approved pass through amount of $11.5 million (nominal, smoothed), to be recovered as follows: $5.6 million in 2025–26 and $5.9 million in 2026–27.
- Ergon Energy (Cyclone Jasper): approved pass through amount of $24.6 million (nominal, smoothed), to be recovered as follows: $12.0 million in 2025–26 and $12.6 million in 2026–27.
- Ergon Energy (Cyclone Kirrily): approved pass through amount of $15.3 million (nominal, smoothed), to be recovered as follows: $7.5 million in 2025–26 and $7.8 million in 2026–27.
The AER has determined that the December 2023 to January 2024 South East Queensland storms, as well as Cyclone Jasper and Cyclone Kirrily, each met the definition of a natural disaster pass through event and that Energex and Ergon Energy incurred materially higher costs as a result of each event.
The increased costs incurred by Energex and Ergon Energy include capital and operating expenditure required to repair the network and restore supply to customers, which we consider to be prudent and efficient in the circumstances. However, we have removed Guaranteed Service Level payments from the pass through amounts as these are already accounted for in current revenue determinations. We have also corrected modelling inputs and approaches to calculate the efficient pass through amounts.
On average, the estimated bill impact of this cost pass through for Energex customers is an increase of approximately $2 for residential customers and $4 to $5 for small business customers over two years, from 2025–26 to 2026–27. Under the Queensland Government’s uniform tariff policy, the bill impact for Ergon Energy customers is the same as for Energex customers.
Background
The South East Queensland storms from 24 December 2023 to 3 January 2024 caused significant damage to Energex's distribution network, destroying concrete poles, transformers, and power lines across South East Queensland, including the Brisbane, Gold Coast, Logan, and Scenic Rim areas. Approximately 130,000 customers lost electricity, necessitating a large-scale restoration effort.
Cyclone Jasper, which crossed the far north Queensland coast on 13 December 2023, caused significant damage to Ergon Energy’s distribution network, including extensive flooding and widespread power outages, with the most severe impacts occurring in the Wujal Wujal and Yarrabah Aboriginal Shire Councils. Approximately 50,000 customers lost electricity, requiring a large-scale restoration effort.
Cyclone Kirrily, which crossed the north Queensland coast on 25 January 2024, caused significant damage to Ergon Energy’s distribution network, primarily due to fallen vegetation that brought down powerlines, with the most severe impacts occurring in the Local Government Areas of Townsville City, Burdekin Shire, and Charters Towers Regional. Approximately 60,000 customers lost electricity, requiring a large-scale restoration effort.
Under the National Electricity Rules, the AER is required to assess cost pass through applications in relation to natural disaster events. The AER's role is to determine whether a positive or negative change event has occurred, and if so to determine the amount of prudent and efficient costs that should be passed through, to ensure consumers pay no more than necessary.