The Australian Energy Regulator has approved electricity network tariffs proposed by the Victorian distribution network service providers (distributors) CitiPower, Powercor, Jemena Electricity Networks, SP AusNet and United Energy, for the period 1 January 2014 to 31 December 2014.
These businesses charge network tariffs to cover the costs involved in transporting electricity from generators, across the high voltage transmission and low voltage distribution system, to customers’ premises.
Network tariffs typically account for about 40 per cent of residential retail bills in Victoria. They are adjusted annually to cover the costs of network maintenance and upgrades.
"The AER is satisfied that all distributors' network tariffs are recovering only approved costs and comply with the rules framework," AER Chairman Andrew Reeves said.
"Changes to average network tariffs vary between reductions of $11.40 to an increase of $48.30, depending upon which distributor the customer is connected to.”
Mr Reeves said that across Victoria, average retail tariffs would increase by approximately 1 per cent as a result of these tariffs in 2014.This compares to increases in the previous year of 5 per cent. Adding smart meter costs for 2014 increases this to approximately 2 per cent. However, retail tariffs are also affected by changes to wholesale prices and retail costs.
"These increases reflect the need for additional expenditure to replace ageing infrastructure built in the 1960s and 70s.They also reflect more stringent bushfire safety standards and maintaining supply reliability,” Mr Reeves said.
With the introduction of flexible tariffs by the Victorian government, consumers now have an opportunity to reduce energy costs, if they can change their consumption patterns.
“Customers who were looking to reduce their energy bills should consider shopping around for the best deal,” Mr Reeves said.
The AER's approved network tariffs are available at www.aer.gov.au
| DNSP | Typical Residential Network tariff increase, $ per year | Network tariff increase, per cent per year | Increase in retail tariffs, per cent per year* |
| CitiPower | -1.70 | -0.4 | -0.16 |
| Powercor | 48.30 | 6.7 | 2.68 |
| Jemena | 24.60 | 2.1 | 0.84 |
| SP AusNet | 11.80 | 1.5 | 0.6 |
| United Energy | -11.40 | -2.1 | -0.84 |
Background
It is important to recognise that there are many factors that influence the degree to which a consumer’s electricity bill will vary. Individual impacts will differ based on the network tariff to which the customer is assigned, consumption patterns and retailers approach to pricing.
Distribution network tariffs represent around 40 per cent of the total cost of supplying electricity to residential customers. The impact of network tariffs for 2014 are based on an estimated average annual consumption of 6 500 kWh.
Typically, network charges are not itemised on residential customers’ retail electricity bills. Instead, they are included in tariffs charged by electricity retailers.
The AER only regulates network tariffs and has no role in approving or assessing retail tariffs. These are competitively provided in Victoria.