SAPN - Letter to AER - Bushfire liability premiums step change 2020-25 - Februrary 2020

SA Power Networks has made further submissions seeking to add a new step change to its opex allowance and also add a new contingent project.

These proposals have been provided by SA Power Networks late in our review process and after it lodged its revised proposal. We have decided to open a short consultation period to allow stakeholders to comment on the proposals.

Each proposal and the relevant documents are below along with details as to how submissions should be made.

Bushfire Risk Review Contingent Project 

On 15 January 2020, SA Power Networks submitted material additional to its revised proposal regarding costs it may incur relating to a recently initiated inquiry into bushfire risk. It proposes to address this through a new contingent project. Under clause 6.6A.1 of the NER, a regulatory proposal may include proposed contingent capital expenditure, which the Distribution Network Service Provider considers is reasonably required for the purpose of undertaking a project that is probable but uncertain within the forthcoming regulatory control period. The costs related to a contingent project are not included as part of capital expenditure until a specific trigger has been met during the forthcoming regulatory control period.

Opex Step Change

On 10 February 2020, SA Power Networks made a submission further to its revised proposal seeking additional operating expenditure (a step change) for increased bushfire liability insurance premiums over the 2020-25 regulatory control period. SA Power Networks notes that following the recent bushfire events in Australia, it has received new information which indicates that bushfire insurance premiums will be materially higher than the premiums included in its 2018-19 base year operating expenditure. As a result, it is seeking an increase in its forecast operating expenditure that takes into account this information and the expected change in bushfire liability insurance premiums. A public version of this submission can be accessed below.

Submissions 

Submissions closed on 6 March 2020