The Australian Energy Regulator (AER) has issued its draft decision on the revenue proposal submitted by the Tasmanian electricity transmission business, TasNetworks (previously known as Transend). The revenue proposal applies for the four years starting on 1 July 2015.
TasNetworks is responsible for the transmission lines that transport electricity across Tasmania. This draft decision proposes the revenue amount (and therefore charges) that this business can recover from its customers from 1 July 2015 to 30 June 2019. Up to 50 per cent of a consumer’s energy bill can be attributed to the cost of delivering electricity through the transmission and distribution networks.
“We have broadly accepted the revenue proposal put forward by TasNetworks as fair and reasonable,” AER Chair Ms Paula Conboy said.
“TasNetworks has managed to balance the need for a safe and reliable energy supply with the concerns customers have raised about their bills.”
“We estimate that our draft decision, if implemented, would reduce annual electricity bills for a typical residential household living in Tasmania, on average, by $10 in 2015–16. Similarly, annual electricity bills for small business customers, such as shop owners, would reduce by an average of $16 in 2015–16,” Ms Conboy said.
This decision included input from an advisory panel including consumer advocates that advises the AER on how pricing 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.
“This is the first decision under the new regulatory framework that allows the AER to closely examine businesses’ spending proposals to ensure consumers are only paying for an efficient service,” Ms Conboy said.
“TasNetworks was able to clearly demonstrate that it has listened to its customers and taken steps to address customer concerns. AER benchmarking has found TasNetworks to be operating more efficiently than many other businesses in the National Electricity Market.”
The AER has set a rate of return of 6.88 per cent consistent with the approach set out in its Rate of return guideline. This approach has been adopted by TasNetworks.
The AER draft determination allows TasNetworks to recover $731 million in total revenue from its customers for the four year determination period.
In response to the AER's draft decision, TasNetworks may provide a revised revenue proposal to the AER by 13 January 2015. Submissions on the AER's draft decision and the revised revenue proposal are invited by interested parties and may be made by 6 February 2015.
The AER will make its final determination in April 2015 after considering further submissions from TasNetworks, customers, and other stakeholders.