Overview

Extension of regulatory control period

In April 2019 the Victorian Minister for Energy, Environment and Climate Change advised the AER and the Victorian distribution businesses of the government’s intention to change the timing of the annual Victorian electricity and gas network prices changes. The change would bring Victoria into alignment with the other NEM jurisdictions to operate on a financial – rather than calendar – year basis.

The change, which requires passage through Victorian parliament to give effect through legislation, is intended to extend the current regulatory control period by six months and change the commencement of the next regulatory control period to 1 July 2021. Due to unforeseen delays in passage of the legislation, the AER will not be making a final revenue determination on the six-month period on 30 September 2020. Proceeding on the basis that the legislation will be in place in October 2020, we set out below indicative timetable for steps for the revenue and pricing decisions for the six-month extension period.

The indicative timetable and any documents, models and values provided or published under the timetable are subject to the legislation. In order for the pricing process for the six-month extension period to progress as quickly as possible after the legislation is in place, we will take steps in this process before the final revenue determination for the six-month extension period is released.

The indicative timetable set out below summarises key dates relating to the six-month extension. To promote transparency, key milestone documents will be published. The AER has already published its indicative position setting out its approach to calculating revenue and price caps for the six-month extension period.In late September we will be providing Powercor with the information it requires to prepare its annual pricing proposal for the prices that will apply from 1 January 2021. Shortly after that we will also publish a document setting out the key parameters we have requested the distributors use in preparing their pricing proposals. Once available, the distributors’ pricing proposals for the six-month period will also be published.  Our positions page provides background information to the overall process.

All public and confidential information is managed in accordance with the ACCC/AER information policy.

Indicative timetable

Indicative dates and key milestones for the extension of regulatory control period by six months
Milestone Date*
AER provided distributors with the proposed approach to calculating standard control services building block components and control mechanism formulae for the six-month extension November and December 2019
Distributors submitted initial regulatory proposals to the AER 31 January 2020
Submissions due on the AER issues paper 3 June 2020
AER published indicative position setting out approach to calculating revenue and price caps for the six-month extension 17 August 2020
AER provides pre-populated pricing models to distributors using indicative revenue amounts Late September 2020
AER publishes draft distribution determinations for the 2021-2026 period 30 September 2020
AER publishes key parameters the distributors have been asked to use in preparing their pricing proposals for the six-month extension period Early October 2020
Distributors submit draft pricing proposals to the AER for the six-month period

Mid-October 2020

AER publishes decision on the application of the 2018 rate of return instrument to the six-month extension period Legislation in place/ late October
AER publishes final decision on the six-month extension period Legislation in place/ late October
Distributors submit final pricing proposals to the AER for the six-month extension period After the AER’s final decision on the six-month extension period
AER publishes approved prices for the six-month extension period No later than 20 November 2020
Six-month extension period commences 1 January 2021

*Dates are indicative and subject to change.

Update - 15 October 2020

Letter from the AER to Powercor, provided on 8 October 2020, setting out the key parameters for use in its pricing proposal. This letter is subject to the legislation and the AER’s final decision. In particular, following the provision of these letters to the Victorian distributors, minor errors were identified that will result in small changes to some of the figures provided in these letters. These changes have been communicated to the distributors and will be corrected in our final decision.