AER begins consultation on proposed network electricity charges in SA

SA Power Networks is proposing higher electricity charges over the next five years according to its regulatory proposal submitted to the Australian Energy Regulatory (AER). SA Power Networks has proposed annual increases to network charges of around 2 per cent, on average, over the next five years. SA Power Networks’ charges make up around 30 per cent of consumers’ electricity bills.

To help consumers better understand the proposal, the AER has released an issues paper that focusses upon the key aspects of SA Power Networks’ proposal. The paper highlights aspects of the proposal that drive prices and reliability – issues that affect consumers and need to be carefully examined.

“Energy consumers should not pay more than necessary for a safe and reliable electricity service. SA Power Networks needs to explain its spending proposal and we would like to hear from energy consumers whether they think these increases are justified,” AER Chair Paula Conboy said.

SA Power Networks will be making a high level presentation on its proposal at a public forum on 10 December 2014 in Adelaide. 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 scrutinizing the proposal 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 markedly. 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, the AER has also established an advisory panel including consumer advocates that advises the AER on how the businesses’ proposals meet consumer expectations. The Consumer Challenge Panel (CCP) assists the AER to make better regulatory determinations by providing input on issues of importance to consumers.
The AER also has direct contact with consumer representatives and interested stakeholders in the network’s distribution areas.

The role of the AER is to decide on the amount of revenue that the business 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.