Endeavour Energy - Determination 2014-19 - Remittal

Sector: 
Segment: 
Commencement date: 
16 August 2017
Regulatory period: 
1 July 2014 to 30 June 2019
(5 years)
Status: 
Contact: 
General enquiries – NSW/ACT Remittals NSWACTremittal@aer.gov.au
AER reference: 
62672

Overview

The AER is required to remake its decision on the distribution determination that applies to Endeavour Energy for the period 1 July 2014 to 30 June 2019.

On 16 August 2017 the AER met with key stakeholders to discuss the process for remaking the operating expenditure (opex) decisions for the NSW and ACT electricity distribution businesses for the 2014-19 regulatory control period. Key outcomes from the meeting are available below and under the initiation milestone. In the coming months the AER intends to release an issues paper on the opex remittal process for public consultation.

The AER expects to commence the cost of debt remittal work after the Australian Competition Tribunal hands down its decisions for ActewAGL Distribution’s ACT gas network and Jemena Electricity Networks.

Background

In April and June 2015 the AER published final decisions on distribution determinations for NSW and ACT electricity distributors (Ausgrid, Endeavour Energy, Essential Energy and ActewAGL Distribution) for 2019-24, and on the access arrangement for the NSW gas distributor, Jemena Gas Networks for 2015-20.

All five businesses sought merits review of the AER’s final decisions. The Public Interest Advocacy Centre (PIAC) also applied for review of the AER’s NSW final decisions. The Commonwealth minister intervened.

The Tribunal handed down its decisions in February 2016 (and March 2016 for JGN). It remitted the decisions back to the AER to be remade, in particular in accordance with its orders regarding the return on debt; the value of imputation credits (gamma), which is relevant to the businesses’ tax allowance; the four electricity distributors’ operating expenditure (and for ActewAGL the implications of this for the Service Target Performance Incentive Scheme); and aspects of JGN’s capital expenditure.

In March 2016 the AER sought judicial review of the Tribunal’s decisions on gamma, return on debt and opex in the Full Federal Court.

The Court upheld the AER's appeal in respect of the Tribunal's construction of the rules regarding gamma, which feeds into the businesses tax allowance. The Court dismissed the AER's appeal in relation to the cost of debt and the operating expenditures of the electricity businesses.

The AER must now revisit its decisions on return on debt; the four electricity distributors’ operating expenditure (and for ActewAGL the implications of this for the Service Target Performance Incentive Scheme); and aspects of JGN’s capital expenditure.