The Australian Energy Regulator has made its first formal decision in preparation for future price determinations for the Australian Capital Territory and New South Wales electricity distribution businesses, AER Chairman, Mr Steve Edwell announced today.
The price reset will cover Country Energy, EnergyAustralia, Integral Energy and ActewAGL from 2009-2014.
As part of the national energy market reforms, the AER in January assumed responsibility for regulating network charges from state regulators.
"The AER is well advanced in its preparations to begin the regulatory determination for electricity distribution network charges in NSW and the ACT.
"It has approved the cost allocation methods to be used by Country Energy, EnergyAustralia and Integral Energy in their regulatory proposals for 2009-14. The AER has also approved the cost allocation method for ActewAGL in the ACT."
The approval of the cost allocation methods is the first decision made by the AER as part of its first distribution determination in NSW and the ACT. Approval of the cost allocation methods is a new requirement of the National Electricity Rules which took effect from January 2008. The cost allocation method aims to ensure that costs are appropriately allocated and that data provided by the businesses will be collected on a consistent basis over time. This will assist the AER to make more timely and informed price determinations for these businesses.
The approved cost allocation methods will be maintained on the websites of each business.
"More broadly, the AER has been working closely with the ACT and NSW electricity distribution businesses over the past 12 months in developing the basis on which charges will be regulated," Mr Edwell said. "In particular, the new rules require the AER to specify the information which the businesses have to provide and also require the AER to consult with interested parties."
The AER has published a series of guidelines on its website setting out its proposed approach and it has also held public forums in Sydney and Canberra.
On 2 June this year the ACT and NSW electricity distribution businesses will be required to submit to the AER a regulatory proposal based on the approved cost allocation method. Distribution charges account for around 40 per cent of household electricity bills in NSW.
The AER is pleased to have made its first decision in preparation for the price determinations for the ACT and NSW electricity distribution businesses.
Background
Previously the Independent Prices and Regulatory Commission (IPART) in NSW and the Independent Competition and Regulatory Commission (ICRC) in the ACT were responsible for regulating the electricity distribution businesses in NSW and the ACT.
The IPART is an independent body that oversees regulation of the water, gas, electricity and public transport industries in New South Wales.
The ICRC is a statutory body set up by the ACT government to regulate prices, access to infrastructure services and other matters in relation to regulated industries.
ActewAGL is an Australian multi-utility that offers electricity, natural gas, water and wastewater services. ActewAGL is the only business that provides electricity distribution network services in the ACT.
Country Energy is an Australian energy services corporation owned by the New South Wales Government, with around 4,000 employees serving more than 870,000 customers. Country Energy manages a power supply network across 95 per cent of New South Wales' land mass. It is one of three providers of electricity distribution network services in NSW.
EnergyAustralia operates an electricity network distributing electricity to the Sydney, Central Coast and Hunter regions covering approximately 22,000 square kilometres and supplying approximately 1.4 million customers. It is one of three providers of electricity distribution network services in NSW.
Integral Energy is a state-owned energy corporation in NSW that operates an electricity network that serves over 2.1 million people across 24,500 square kilometres in Sydney's Greater West, the Southern Highlands and the Illawarra. Integral Energy is one of three providers of electricity distribution network services in NSW.