On 18 July 2016, Ausgrid, Endeavour Energy and Essential Energy (the NSW distributors) submitted a joint rule change request to the AEMC seeking a participant derogation to amend the National Electricity Rules (NER). ActewAGL submitted its proposed derogation to the AEMC on 23 September 2016, which references the NSW distributors’ request and modifies it to address issues particular to its distribution determination.
The rule change requests sought to provide a mechanism to minimise pricing volatility for NSW and ACT customers that may occur at the conclusion of the merits review and judicial review proceedings for the NSW distributors and ActewAGL (NSW/ACT distributors). The rule change requests proposed to allow any required adjustments to the NSW/ACT distributors’ revenues for the 2014-19 regulatory control period to be recovered over two regulatory control periods.
Consultation paper
On 20 December 2016, we provided a submission in response to the AEMC consultation paper, which covered both rule change requests of the NSW/ACT distributors.
Our submission supported the objective of smoothing the NSW/ACT distributors' revenue over two regulatory control periods to avoid a potential bill shock to customers towards the end of the 2014–19 regulatory control period that might result from the appeals. However, we had concerns with the highly detailed and prescriptive rules the NSW/ACT distributors proposed to achieve this objective. We suggested it is preferable to have high-level principles-based provisions that focus on the core problems (potential price shocks) and the core solution (smoothing of revenue across regulatory control periods). We can then resolve the details of application, in consultation with the NSW/ACT distributors and other stakeholders, with reference to these principles.
AER submission to AEMC - Revenue smoothing (consultation paper) - 20 December 2016
Draft determination
On 23 June 2017, we provided a submission in response to the AEMC’s Draft Rule Determinations for the NSW distributors and ActewAGL.
Our submission supported changes the AEMC made in its draft rule determinations, which reduced the extent of prescription and complexity that was evident in the rules the NSW/ACT distributors proposed. On the other hand, we considered the AEMC’s draft rules were still more detailed and complex than necessary and could give rise to unintended consequences. In our submission, we re-iterated it is preferable to have provisions that set out high-level principles. We also included comments and suggestions for specific changes to particular provisions of the draft rule should the AEMC opt to retain some level of prescription in its final rules.
AER submission to AEMC - Revenue smoothing (draft determination) - 23 June 2017
More information
More information on rule change requests from the NSW distributors and ActewAGL can be found on the AEMC’s website.