The AER has released draft decisions on the 2025-30 revenue proposals submitted by electricity distribution business SA Power Networks and transmission interconnector Directlink.
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 the next five years.
Our draft decisions on expected revenues for the 2025-30 period are ($nominal):
- SA Power Networks: $5,143.5 million for main standard control services, or $20.5 million (0.4%) less than proposed.
- Directlink: $123.8 million, or $14.7 million (10.6%) less than proposed.
Our draft decisions for SA Power Networks and Directlink seek to ensure efficient investment in an energy system that delivers safe, reliable and secure energy that meets consumer needs. Consumers are at the heart of our work, and we were pleased to see that both revenue proposals were informed by a level of stakeholder engagement that met our expectations as outlined in our Better Resets Handbook.
Our draft decision for SA Power Networks accepts aspects of the proposal that address challenges facing the network in a prudent and efficient manner. We found that SA Power Networks’ proposed operating expenditure (opex) was justified as prudent and efficient, with increases largely being driven by ICT-related requirements. We recommend reductions to capital expenditure (capex) due to overstated risk assumptions and a lack of evidence to support some of the proposals. We encourage SA Power Networks to continue to utilise all available options to get the most out of its existing network, before proposing to build more.
We did not accept SA Power Networks’ proposed innovation fund as it currently stands. We recommend SA Power Networks further consider its proposed innovation fund and provide us with a more detailed and considered plan and scope. We recognise the importance of innovation to support the transition, and the work SA Power Networks has undertaken in its proposal to support electrification through consumer energy resources and tariffs.
Our draft decision for Directlink recognises the need to maintain reliability and safety of the interconnector as it progresses to the end of its economic life in 2041-42. We accept programs that achieve this in a cost-effective manner. We recommend reductions to opex and capex. Our draft decision for capex is a placeholder, subject to further supporting evidence, particularly regarding the spares management program.
Next steps
The businesses have until 2 December to respond to the respective draft decisions with a revised proposal. We encourage businesses to continue engaging with consumers to inform their revised proposals.
The AER will hold online public forums on the draft decisions on 14 October 2024. Stakeholders can register their interest in the forums for SA Power Networks and Directlink. Interested stakeholders are invited to send submissions on the draft decisions and revised proposals by 17 January 2025. Submissions and requests to make a submission via alternative methods should be emailed SAPN2025
aer [dot] gov [dot] au (SAPN2025[at]aer[dot]gov[dot]au) or directlink2025aer [dot] gov [dot] au (directlink2025[at]aer[dot]gov[dot]au).
The AER’s final determinations, which will be made by 30 April 2025, will set revenues that will form the basis for the charges for the 1 July 2025 to 30 June 2030 regulatory period.