The Australian Energy Regulator has released its final decision on ElectraNet’s revenue proposal for the five year regulatory period, 1 July 2013 to 30 June 2018. ElectraNet is the principal electricity transmission network service provider in South Australia.
This decision sets out the maximum revenue that ElectraNet can recover from its customers over the regulatory period via the transmission network component of an electricity bill. This component is about 8 per cent of a typical South Australian retail electricity bill.
The AER’s final decision cuts nine per cent from the revenue requirement proposed by ElectraNet in its original proposal.
“This decision should not result in any material price increases for the average South Australian residential electricity customers' bills over the regulatory period,” AER Chairman Andrew Reeves said.
The release of the AER’s final decision follows an 11 month process of assessing ElectraNet’s revenue proposal, which included the spending proposal for the development, operation and maintenance of the network. The process involved the release of the AER draft decision in November 2012 and a revised revenue proposal from ElectraNet in January 2013.
The AER undertook extensive consultation and sought the views of stakeholders throughout this process. Having reviewed the proposal, the AER has determined a total revenue cap of $1578 million ($ nominal) to deliver electricity to customers over the regulatory period.
The AER’s final decision rejects 12 and 23 per cent of ElectraNet’s original proposal opex and capex forecast expenditure, respectively.
The key reason for the opex reduction is that ElectraNet’s field maintenance opex category was significantly higher than historical expenditure without sufficient economic justification for such an increase. The final decision capex forecast is lower because ElectraNet accepted the lower demand forecast set out in the AER’s draft decision resulting in a $132 million reduction. Additionally, the AER’s capex forecast includes a $38 million reduction to replacement capex so that it is efficient and consistent with ElectraNet’s management practices and historical outcomes.
“Overall, this decision is consistent with the long term interests of consumers. It provides sufficient revenue for ElectraNet to efficiently manage and operate the South Australian electricity transmission network without compromising network reliability, safety or service quality,” Mr Reeves said.