AER begins consultation on proposed network electricity charges in QLD

Queensland electricity distributors, Energex and Ergon Energy have submitted regulatory proposals to the Australian Energy Regulatory (AER). These set out the revenues they propose to collect from electricity consumers through distribution charges for the next five year period (2015–20).

To help energy consumers better understand the proposals, the AER has also released an issues paper that focusses upon the key aspects of Energex and Ergon Energy’s proposals. The paper sets out our initial impressions of the distributors' proposals, including what we think will be some of the key issues for our assessment. We hope this paper is helpful for readers to form their own views on the distributors' proposals.

“Energy consumers should not pay more than necessary for a safe and reliable electricity service. Energex and Ergon need to explain their spending proposal and we would like to hear from energy consumers whether they think these proposals are sufficiently justified,” AER Chair Paula Conboy said.

Energex and Ergon Energy will be making a high level presentation on their proposals at a public forum on 9 December 2014 in Brisbane. The AER will publish the presentation material on its website. Media are invited to attend.

The issues paper and forum signal the commencement of a comprehensive consultation period over the next nine months, during which the AER will be scrutinising the proposals through a public review process. Anyone interested in participating in the review will be able to make written submissions.

“Investment conditions have improved since the last review in 2010 and the costs of financing of infrastructure businesses have come down. Demand has also decreased and these factors will have a bearing on revenue requirements,” Ms Conboy said.

“What we are hearing from consumers is that electricity prices are too high and need to come down. At the same time, we must be satisfied that energy businesses are providing their services as efficiently as possible. We balance the requirements of a safe, stable and reliable network against the price pressures facing consumers. It’s all about getting the balance right, so a critical part of the review will be the views of energy consumers and stakeholders” Ms Conboy said.

In addition to submissions from the public, AER has established the Consumer Challenge Panel (CCP) to assist us in making better regulatory determinations by providing input on issues of importance to consumers. The CCP advises the AER on whether a network business's proposal is justified in terms of the services to be delivered to customers; whether those services are acceptable to, and valued by, customers; and whether the proposal is in the long term interests of consumers. The AER has also direct contact with consumer representatives and interested stakeholders in the networks’ distribution areas.

The role of the AER is to decide on the amount of revenue that the businesses can recover from customers and, in so doing, promote efficient investment in, and efficient operation of, electricity services for the long term interests of consumers of electricity.

Submissions should be sent to the AER by 30 January 2015. A preliminary determination will be published in April 2015, and further submissions will be invited at that time. Final determinations will be made by October 2015.