The framework and approach (F&A) is the first step in a process to determine efficient prices for electricity distribution services. The F&A determines, amongst other things, which services we will regulate and how we propose to apply the relevant incentive schemes. It also facilitates public consultation and assists distribution network service providers (distributors) to prepare regulatory proposals.
The electricity distribution businesses in NSW are Ausgrid, Endeavour Energy and Essential Energy, and in the ACT ActewAGL. Electricity distribution networks comprise the poles, wires and transformers used for transporting electricity across urban and rural population centres to homes and businesses.
The current five year distribution determinations that set revenue allowances for these distributors conclude on 30 June 2014. The next five year regulatory control period begins 1 July 2014 and ends 30 June 2019. As part of the AEMC’s changes to the rules governing network regulation there are transitional rules for NSW and ACT distributors. The transitional rules require us to publish the NSW F&A in two stages. The Stage 1 F&A and Stage 2 F&A set out our approach to issues for a transitional period (1 July 2014 to 30 June 2015) and a subsequent period (1 July 2015 to 30 June 2019).
We published the Stage 1 F&A on 25 March 2013. On 31 January 2014 we published the Stage 2 F&A which covers how we propose to apply a range of incentive schemes and other guidelines to the ACT and NSW distributors, as well as our approach to calculating depreciation. Specifically the:
- service target performance incentive scheme (STPIS)
- efficiency benefit sharing scheme (EBSS)
- capital expenditure sharing scheme (CESS)
- demand management incentive scheme (DMIS)
- expenditure forecast assessment guidelines
- approach to calculating depreciation.
Following release of the Stage 1 and 2 F&A, NSW and ACT distributors will submit regulatory proposals in early 2014.