Final revenue decisions balance affordability and required investment

The Australian Energy Regulator (AER) has today published its final revenue decisions for six electricity network businesses – Ausgrid, Endeavour Energy, Essential Energy, Evoenergy, Power and Water Corporation and TasNetworks for the 2024-29 regulatory period. 

Electricity transmission and distribution network businesses are required to submit revenue proposals to the AER every five years outlining how much they intend to recover from consumers over a five-year period to provide safe, reliable and secure electricity services and address important emerging issues such as network cybersecurity, climate resilience, integration of consumer energy resources, and digitalisation. 

AER Chair Ms Clare Savage said the final decisions seek to balance affordability with providing the necessary expenditure that will support the changing nature of the energy system.

“These revenue determinations have been developed during a challenging time for energy consumers and the sector more broadly. Cost-of-living pressure and affordability concerns continue to be front of mind for consumers.

“We have looked to ensure consumers pay no more than necessary for safe and reliable energy while supporting the transitioning energy market,” Ms Savage said.

The main drivers of increased costs include inflation and rising interest rates causing a higher rate of return in the businesses’ final proposals, compared with levels in the last five years.

In this rising cost environment, it was important for the network businesses to prioritise areas of revenue expenditure identified by consumers and communities as priorities for them, through their engagement and consultation.

“We’ve seen a strong commitment from all six businesses to engage with customers and have their preferences considered and reflected in their revenue proposals. 

The businesses have proposed expenditure in important emerging areas such as improved network resilience to address climate change-related risks, the uptake and integration of consumer energy resources (including rooftop solar, batteries and electrical vehicles), and cyber security and digitalisation measures. Innovation will enable customers, who are able to respond, with greater opportunities to reduce their bills.

“We believe there are efficient levels of funding in our decisions to allow the businesses to meet these challenges and address these priorities,” Ms Savage said.

Our decisions support the accelerated roll-out of smart meters proposed by the Australian Energy Market Commission and the benefits they provide to the whole system by approving the cost recovery of old network-delivered meters in the quickest, lowest cost way to all customers. 

“We continue to ensure the long-term interests of consumers by recognising the affordability challenges, while maintaining a focus on efficient and prudent investment to support the energy transition,” Ms Savage said.

The table below outlines the expected revenues for each business for the 2024-29 period, including estimated bill impacts for consumers and small businesses (nominal terms). The business names in the table link to the final decision documents.