The Australian Energy Regulator has issued its final determination on Aurora Energy's revised regulatory proposal. The AER’s final determination controls the revenues that Aurora can earn from its electricity distribution network for 1 July 2012 to 30 June 2017.
The AER has set revenues of $1.4 billion over 5 years, $200 million less than Aurora’s revised proposal.
“Aurora revised its proposal in response to the AER’s draft decision, narrowing the issues of disagreement”, AER chairman Andrew Reeves said.
“The key difference of opinion between Aurora and the AER is the rate of return”, he said.
Aurora proposed lower capital expenditure than in the current period, which the AER has further reduced. The AER also rejected Aurora’s proposed operating expenditure.
“The AER’s draft determination in November 2011 predicted a minimal effect upon residential bills, but did not take account of decreases in electricity usage compared to forecasts over the past few years. This has meant that Aurora did not recover all of its previous allowance, and an adjustment must now be added to the AER’s determination.”
Overall, the AER's determination will result in an increase in distribution network charges from 1 July of 6.2 per cent. Network charges will be steady over the remaining years.
The AER’s determination will result in an initial 3 per cent increase in a typical residential bill due to distribution charges, but then steady over the remaining years. Bills will also be affected by other factors.
These calculations assume inflation of 2.6 per cent per annum and growth in consumption of 1 per cent per annum.