The Australian Energy Regulator today issued its draft decision on VENCorp's electricity transmission determination for the regulatory period 1 July 2008 to 30 June 2014.
"The draft decision provides for over $200m of new investment in network growth over the next six years, and will allow VENCorp to manage cost pressures while continuing to meet system constraints emerging towards the end of the forthcoming control period," AER Chairman, Mr Steve Edwell, said.
"This will maintain the strong record of reliability, safety and security that users have come to expect from the Victorian electricity transmission system."
The AER proposes to allow revenues for VENCorp that increase from $373.08m (nominal) in 2008-09 to $516.85m (nominal) in 2013-14.
The revenue determined in the draft decision will result in a nominal per MWh transmission 'price' of $9.68 in 2013-14, compared to the expected per MWh price of $6.88 in 2007-08. This amounts to an average increase of 6 per cent per year.
Transmission charges represent approximately 10 per cent on average of end user electricity charges. The AER has estimated that the increase in transmission charges under this draft decision will add approximately $3.00 (0.37 per cent) to an average residential customer's annual bill of $800 in the first year of the decision, 2008-09. This is expected to increase by an average of 0.43 per cent annually until the regulatory period ends in 2013-14.
The AER invites written submissions in response to its draft decision, which close on 19 February 2008. The AER will hold a pre-determination conference on this draft decision in Melbourne on Wednesday 12 December 2007 for the purpose of explaining its draft decision and receiving oral submissions from interested parties.
Further details are available on the AER's website. The AER will consider all issues raised by interested parties in response to its draft decision before issuing its final decision.
The Victorian electricity transmission network consists of over 6,500 kilometres of high voltage transmission lines, spanning approximately 227,600 square kilometres throughout Victoria. The network serves over 1.8 million households and 280,000 businesses, transporting in excess of 45 million MWh of energy each year.
The transmission arrangements in Victoria, which separate the network asset owner (predominately SP AusNet) from the investment decision-maker (VENCorp), are unique in the NEM. SP AusNet owns and operates the transmission network and provides bulk transmission services to VENCorp under a network agreement. VENCorp owns no transmission assets itself, but provides shared network services to users and is responsible for planning and directing the augmentation of the shared network (which excludes the connection facilities utilised by generators and distribution bodies).
The Australian Energy Regulator (AER) is responsible for the economic regulation of monopoly transmission services in the National Electricity Market (NEM). The AER makes determinations according to the National Electricity Rules in respect of certain services provided by transmission businesses, including VENCorp.
VENCorp submitted its revenue proposal and proposed negotiating framework for the 1 July 2008 to 30 June 2014 regulatory period on 1 March 2007. VENCorp's pricing methodology was submitted separately on 7 June 2007. SP AusNet's transmission determination was the subject of a separate draft decision, issued in August 2007.