The AER has remade its Victorian electricity distribution determinations in accordance with decisions by the Australian Competition Tribunal. These affect the network charges that can be levied by the five Victorian distribution network businesses, Citipower, Powercor, SP AusNet, Jemena Electricity and United Energy.
The remade determinations will have the effect of increasing network charges in the remaining years of the current regulatory period, between 2013-2015. The remade determinations have also been affected by new Victorian legislation which has to some extent moderated these increases.
In 2013, the resulting increase in network charges across all the distribution businesses is estimated to be around $19 or 2.6 per cent for the average residential customer (see attached table). This would result in an average increase of around 1 per cent to a customer’s total annual retail bill.
“While these further increases are of concern, in remaking these determinations the AER has been mindful to smooth the price impact over the remaining years of the regulatory period to minimise any price shock to customers,” AER chairman Andrew Reeves said.
The Tribunal’s decision, and the offsetting impact of the Government’s legislation, means the Victorian distribution network businesses will be allowed to recover $255 million in additional revenues from customers compared to those allowed by the AER in its 2010 determination. This is a 3 per cent increase on total allowed revenue of $8.8 billion over the 2011-15 regulatory period.
The most significant driver of the difference between the AER’s 2010 determinations and the remade determinations is the Tribunal’s decision providing a higher allowance for the financing costs for all businesses.