The Australian Competition Tribunal has handed down its decision on an appeal by United Energy Distribution and Jemena Electricity Networks against the Australian Energy Regulator's determination in October 2009 on Victorian Advanced Metering Infrastructure budgets for 2009 to 2011 and metering charges for 2010 and 2011.
The Tribunal decided to vary the AER's determination by adding the management fees paid by UED and JEN to a related service provider (Jemena Asset Management) for the AMI roll-out to their approved budgets. This was on the basis that such fees were not outside the scope of the AMI roll-out under the Victorian Government’s regulatory requirements, as specified in its Order in Council.
This results in an increase to the capital and operating expenditure budgets for 2009-11 of $8.3 million for JEN and $12.6 million for UED, which increases UED's average meter charges for 2010 by 3.8% and 3.3% for 2011. There will be no increase in JEN’s charges as it had elected to under-recover its costs for 2010 and 2011 and recover these through higher charges in future years.
"At the request of stakeholders the AER investigated the issue of margins and management fees paid by the regulated businesses to related parties and whether these were permitted under the Victorian Government’s Order in Council," AER chairman Mr Steve Edwell said. "The Tribunal considered that these fees were associated with activities that were allowable under the Order in Council."
The AER's decision to remove similar margins paid by Citipower and Powercor to a related service provider was not appealed.