The Australian Energy Regulator today issued the 2009-2011 gas performance report for Victorian distribution network service providers (DNSPs). The DNSPs covered in the report are Envestra, Multinet and SP AusNet.
The Victorian DNSPs deliver gas through low pressure pipelines directly connected to a customer’s premises. Distribution network charges generally make up about 40-60 per cent of a household customer’s bill.
As gas distribution networks are natural monopolies, the AER regulates the DNSPs overall prices.
The performance report provides information on the financial performance, reliability and customer service outcomes of Victorian distribution networks managed by the DNSPs, and how they are performing in comparison to performance targets. This facilitates informed public input into the AER's decision making and ensuring accountability for performance outcomes.
AER chairman Andrew Reeves said that the report highlighted some key trends in performance for the Victorian DNSPs.
"First, gas reliability performance is generally high across the DNSPs and reliability continues to remain high, where a customer could expect on average an outage only every 40 years. However, for a small number of customers connected to Envestra and Multinet’s network there has been an increase in repeated and lengthy interruptions over the period,” Mr Reeves said.
"Second, notwithstanding strong reliability levels, Multinet and Envestra have spent less capital expenditure than the amount that has been funded by customers over the period. This was principally due to these businesses not achieving the target levels of replacement expenditure for old parts of the network which are more prone to leakages.”
"Third, DNSPs continue to earn substantially more returns on assets than forecast, despite energy sales being in line with expectations. This resulted in additional earnings in aggregate across the businesses of around $120 million over 2009-2011. These additional returns were principally due to businesses spending less on network replacement expenditure over the period.”
“For the forthcoming period, the DNSPs will need to separately apply to the AER to recover higher spending, where they are required to replace more of the network than previously. This will ensure that customers do not pay higher prices than necessary.”
The AER is expected to release tomorrow the final regulated terms and conditions, including prices to apply from 1 July 2013 until 31 December 2017, for each business.