The Australian Energy Regulator (AER) today published its final position on the second stage of the annual pricing process review.
This includes revised standardised pricing models, a statement of compliance, and expectations for pricing proposal submissions for the upcoming 2023–24 annual pricing process. The final position paper also includes a process for earlier approval of pricing proposals in the first year of a regulatory control period.
The outcome of this review will streamline assessment processes and improve the efficiency, accuracy, and transparency of pricing proposals from electricity Distribution Network Service Providers (DNSPs).
The AER anticipates it will result in the ability to approve pricing proposals faster, to ensure approved network prices are finalised in time to be included in Default Market Offers (DMO) as well as provide sufficient time for retailers to develop and communicate prices.
This completes the second stage of a review into improving the annual pricing process for electricity DNSPs. Earlier in this stage, we published a final position paper on the side constraint mechanism, which set out a revised mechanism for use by DNSPs in their upcoming regulatory proposals.
The first stage of this review included the development of a pre-lodgement engagement process and standardised pricing models that were used in the 2022–23 annual pricing process. Future stages of this review may occur and will likely focus on producing standardised templates for pricing proposals documents.
The development of these aspects for the annual pricing approval process follows the AER’s commitment in the AER Strategic Plan 2020–2025 to design systems to work in ways that deliver efficient regulation of monopoly infrastructure.