The Australian Energy Regulator has released an Issues Paper on its review of the amounts that Victorian electricity distribution businesses propose to recover from customers over the next five years. The paper details the regulatory proposals submitted by the five distribution businesses in Victoria. Consultation on these proposals has started.
If approved in full as submitted to the AER, the businesses would be entitled to recover $11.7 billion from customers in Victoria from 2016 to 2020. Up to 40 per cent of an average household’s energy bill can be attributed to the cost of delivering electricity through the distribution networks.
“The AER will now assess these proposals to ensure that consumers are paying no more than necessary for safe and reliable electricity services,” AER Chair Ms Paula Conboy said.
The Victorian distribution businesses are proposing moderate increases in revenues over the next five years, which means that if approved, residential electricity bills would increase by roughly the same rate as the Consumer Price Index (CPI).
The AER regulates the revenues of the network businesses by setting the annual revenue requirement they may recover from customers. Other components of consumer bills include the cost of generation, transmission network charges and retailer costs. The AER does not set retail prices.
“Through our recent Better Regulation program the AER has developed new guidelines and techniques, including improved benchmarking, to better forecast how much network businesses operating prudently and efficiently should need to spend,” Ms Conboy said.
The Issues Paper is the start of a comprehensive consultation process. The AER will assess the Victorian distribution businesses’ proposals over the next 11 months. The AER established an expert panel comprising of consumer advocates, which will advise on whether the regulatory 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 encourages consumers and other interested parties to get involved in the Victorian electricity distribution pricing review—be it through attending public forums or making written submissions.
Public forum
The first public forum is on 22 June 2015 in Melbourne from 9.30am at the AER’s office, Level 35, 360 Elizabeth Street (the Melbourne Central Tower). Interested parties who wish to attend this public forum are encouraged to register by email: VICelectricity2016
aer [dot] gov [dot] au (VICelectricity2016[at]aer[dot]gov[dot]au). Initial submissions on the regulatory proposals are due by 13 July 2015.
The AER will make preliminary determinations in late October 2015 and final decisions by the by the end of April 2016.