AER: efficient spending focus of Ausgrid draft decision benefits consumers

A focus on efficient spending by energy networks has driven the Australian Energy Regulator’s (AER) remade draft decision on the amount of revenue Ausgrid can recover for the five‑year 2014-19 regulatory period.

“We are satisfied this decision is in the long-term interests of consumers and will promote price stability at a time where affordability is a key concern for many consumers,” said AER chair Paula Conboy.

In 2015, Ausgrid proposed to recover $12,055.4 million from consumers over the 2014-19 regulatory period, but the AER approved the significantly lower amount of $8,785.2 million in its final decision. Legal action followed, resulting in our 2015 final decision being set aside by the Australian Competition Tribunal

We have remade our set aside decision. If this draft decision becomes our final decision, Ausgrid will be allowed to recover revenues of $9,126.3 million from its customers over the 2014‑19 regulatory period. This will result in a revenue allowance of $341.1 million (or 3.9 per cent) above the revenue we approved in our 2015 final decision.

Remaking our set aside decision in accordance with the orders we received has resulted in Ausgrid recovering approximately $652 million more revenue than what was set out in our 2015 final decision. Our draft decision will result in approximately $310.9 million being returned to customers in the next regulatory period, in line with Ausgrid’s proposal and after the application of corrective modelling adjustments.

The remaking of the determination follows the end of limited merits and judicial review processes in May 2017 arising from the AER’s 2015 final decision.

Ms. Conboy said the process demonstrated the AER’s commitment to helping ensure efficient spending by networks.

“Consumers do not want to pay any more than needed for safe and reliable electricity, and this decision reflects that. At a time when energy affordability is a key concern, Australian businesses and households can take confidence from decisions like this,” she said. 

The AER welcomes further comment from consumers and other interested stakeholders as it moves toward making a final decision by March next year. Stakeholders are invited to make written submissions on the draft decision by 20 December.

Under a separate determination process, the AER released its draft decision on Ausgrid’s revenue proposal for the next (2019‑24) regulatory period, on 1 November.

Issued date: 
22 November 2018
AER reference: 
NR 36/18
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