The Australian Energy Regulator today released the 2009–10 performance report for the ACT and NSW electricity Distribution Network Service Providers (DNSPs). The DNSPs reviewed in the report are ActewAGL, Ausgrid, Endeavour Energy and Essential Energy.
The 2009–10 performance report is the first of its type to be issued by the AER under the national electricity regime.
"The annual performance report represents the next step in the AER's development of a national reporting framework. It forms a vital part of the ongoing development of our incentives for efficient operation of the electricity businesses," AER chairman Andrew Reeves said.
The intention of the AER's performance report is to provide comprehensive, accurate and reliable information for all DNSPs to better inform stakeholders of DNSPs performance and encourage considered analysis of the sector.
"Reporting on the financial and service performance of the DNSPs aims to improve transparency and makes service providers more accountable for the way in which they spend their regulatory allowances," Mr Reeves said.
The AER is continuing to refine its reporting requirements and is also developing benchmarks of the DNSPs' performance to assist in assessing future distribution proposals.
"The type of information presented in these annual performance reports will contribute to our ability to determine efficient capital and operating expenditure levels, and will help to set targets for efficiency incentive schemes," Mr Reeves said.
The report shows that in relation to their basic network services, all DNSPs over-recovered revenues by approximately 3–5 per cent, compared to the forecasts which were published in the AER's 2009 determination. Essential Energy recorded the highest difference between forecast and actual revenue in both percentage terms (5.3 per cent) and value ($45.2 million).
Data contained in the report confirms that all of the NSW DNSPs spent less on capital expenditure than their approved forecasts. The NSW DNSPs reported that the underspend was a result of delays in implementing projects and programs for 2009–10. This underspend meant the majority of the NSW DNSPs' actual return on assets exceeded their forecasts. Endeavour Energy recorded the biggest capital expenditure underspend and largest difference between actual and forecast return on assets.
The report also found that for each of the NSW DNSPs, not only was actual maximum demand for 2009–10 lower than forecast, it was also lower than maximum demand for the previous regulatory year.
"Forecasts of demand drive the need for additional capacity in the network. Where forecasts are inflated, it has a significant impact on the costs to consumers," Mr Reeves said.
The report discusses the reliability of service performance. It notes that the largest cause of supply outages was equipment failure. However, overall reliability levels have improved steadily in recent years for all DNSPs.
The 2009–10 performance report only reviews the ACT and NSW DNSPs. Performance of Victorian DNSPs is reported separately. The AER intends that from 2012–13 the annual performance report will include all NEM DNSPs.