Review of Operating Environment Factors for Distribution Network Service Providers

Sector: 
Segment: 
Status: 
Category: 
Benchmarking
Date initiated: 
11 December 2017
Effective date: 
31 August 2018

Overview

We are currently reviewing and refining our analysis of operating environment factors for the economic benchmarking of electricity distribution network service providers.

In the annual benchmarking reports, we (the AER) examine the relative efficiency of the distribution and transmission electricity network service providers. In doing this we consider the characteristics of each network business, and how their productivity compares at the aggregate level given the outputs they deliver to consumers.

As part of our benchmarking toolkit, we also analyse the operating environment factors that may be unique to particular network service providers and which are not captured by our econometric benchmarking models. This helps us to identify the material factors driving apparent differences in estimated operating efficiency between the distribution networks in the NEM.

As part of the continuous improvement of our economic benchmarking techniques, we are reviewing and refining our analysis of operating environment factors in consultation with industry and other interested parties.

In undertaking this review, we have engaged economic and engineering consultants Sapere Research Group and Merz Consulting to:

  • identify the most material operating environment factors driving apparent differences in estimated productivity and operating efficiency between the distribution networks in the NEM, and
  • quantify the likely effect of each factor on operating costs in the prevailing conditions.

On 11 December 2017 we published a draft report prepared by Sapere Research Group and Merz Consulting for consultation. Submissions on the draft report closed on 9 February 2018 and are now available on our website.

We hosted a workshop on Friday 2 March 2018 to give interested stakeholders an opportunity to discuss the key issues raised in their written submissions.

As a next step, we will seek information from distribution network service providers to refine the operating environment factors analysis for a final report.

Key documents