The Australian Energy Regulator (AER) today released its draft decision on the amount of revenue that ElectraNet, South Australia’s electricity transmission network operator, can collect through network charges for 2018–23.
The draft decision, if implemented, would allow ElectraNet to recover $1588.4 million over the five year period, a reduction of 8.6 per cent ($149.8 million) from ElectraNet’s proposed $1738.2 million.
AER Chair Paula Conboy said that the AER’s draft decision accepts most aspects of ElectraNet’s proposal, including the capital and operating expenditure forecasts.
The difference between the AER’s draft decision and what ElectraNet sought is driven by two technical financial matters where we apply a consistent approach across all decisions and network businesses: the rate of inflation and the value of imputation credits.
“In this time when energy affordability is a concern for many households and businesses, customers need to be confident [that the work of the AER means] that they are paying no more than they need for safe and reliable electricity,” said Ms. Conboy.
“Having assessed ElectraNet’s proposal, we consider it reasonable and supported by an extensive and collaborative process that it undertook with its customers.
“Working to make all Australian energy consumers better off now and in the future is our core business. We expect that today’s draft decision will provide stability in transmission charges for South Australian customers,” Ms. Conboy added.
This is ElectraNet’s first revenue proposal since the ‘black system’ event in South Australia on 28 September 2016 which resulted in a state-wide loss of electricity supply. The AER allowed ElectraNet additional time to submit its proposal given these circumstances. ElectraNet has proposed a modest increase in capital expenditure (13 per cent) in response to the system black event to improve the security of the transmission network and increase its resilience to extreme weather events which we have accepted.
ElectraNet has also identified a number of reviews and contingent projects that may require further expenditure to address current power system security and reliability issues. These may be required during the 2018-23 period but only once the need for them has been clearly demonstrated at a later date when more information is available.
Transmission charges make up approximately seven per cent of household electricity bills for the typical residential customer in South Australia.
The AER is seeking feedback from stakeholders on this draft determination.