AER approval of Victorian electricity network tariffs for 2012

The Australian Energy Regulator has today approved increases in Victorian electricity network tariffs for the period 1 January 2012 to 31 December 2012, for the distribution network service providers (DNSPs), CitiPower, Powercor, Jemena Electricity Networks, SP AusNet and United Energy.

Network tariffs recover the costs associated with transporting electricity along the low and high voltage power lines in urban and rural areas. They typically make up between a third and half of total residential electricity bills in Victoria.

The AER is required to assess the Victorian DNSPs annual pricing proposals for 2012 to ensure that they comply with the AER’s electricity distribution determination for the current regulatory period (2011-15) which capped increases to network charges and the National Electricity Rules.

"The AER is satisfied that all Victorian DNSPs' network tariffs are recovering only the costs that the AER has approved in its final determination and that they comply with the Rules framework," AER chairman Andrew Reeves said.

In assessing compliance with the Victorian distribution determination and the Rules, the AER’s role does not extend to evaluating the merits of individual charges (such as peak and off peak rates).

The impact of the approved network charges will differ, depending upon a customer’s individual tariff and to which DNSP the customer is connected (see table below).

"Network charges for the average residential customer are expected to increase by 11 per cent," Mr Reeves said.

"For the average residential customer, the annual increase in network charges would be approximately $57 on a $1900 bill. The impact will vary according to the customer’s consumption and its location. A customer’s total bill may also be affected by changes in wholesale electricity costs and retail costs, including the impact of green schemes."

The AER’s approved network tariffs are available on the AER’s website and the respective DNSP’s websites.

DNSP Network tariff increase ($) 2011-12 Network tariff increase (%) 2011-12
CitiPower 39 9
Powercor 58 9
Jemena Electricity Networks 43 8
SP AusNet 104 18
United Energy 40 8

(a) It is important to recognise that the estimated impact of the approved network tariff on individual customers will vary based on network tariff, consumption levels and retailers approach to pricing.
(b) Distribution network tariffs represent around 30-40 per cent of the total cost of supplying electricity to residential customers and the impact of network tariffs for 2012 are based on an estimated average annual consumption of 7 500 kWh.
(c) Typically, customers do not see network charges itemised on their final electricity bills. Instead, they are included in tariffs charged by electricity retailers, such as AGL Origin Energy and TRUenergy.

Issued date: 
14 December 2011
AER reference: 
NR 019/11
Infocentre general enquiries 1300 302 502
Andrew Reeves, Acting AER Chairman 03 9290 1419 0419 397 956
Duncan Harrod, Media unit (02) 6243 1108 0408 995 408