AER final decision confirms the power of consumer engagement

Essential Energy’s customers will benefit from the Australian Energy Regulator’s (AER) remade final decision for the current regulatory period (2014-2019) which confirms that Essential will recover $1.7 billion less than it originally proposed.

This decision is consistent with the AER’s draft decision, issued in March, and means Essential Energy can recover total revenues of $5.1 billion from its customers over the five‑year period.

“We are satisfied this decision is in the long-term interests of consumers. At a time when affordability is a major concern it is more important than ever that consumers have confidence that the regulator is ensuring they pay no more than necessary,” said AER Chair Paula Conboy.

The remaking of the decision follows the end of the lengthy legal battles arising from the AER’s original 2015 decision and will maintain network distribution charges at current levels.

In 2015 Essential Energy originally proposed to recover $6.8 billion from consumers over the 2014-2019 regulatory period and disagreed with the AER’s determination and legal action followed. Key elements of the dispute were $737 million for forecast operating expenditure and $277 million in return on debt.

The revised amount to be recovered from consumers is $100 million above what the AER approved in its 2015 decision; a decision that was set aside by the Australian Competition Tribunal.

Noting that there has been some commentary around Essential Energy recovering revenue above its allowance, Ms. Conboy assured consumers they would not be paying more than what the final decision has provided for.

Ms. Conboy welcomed the highly collaborative approach taken by Essential Energy during the revised revenue setting process.

“Essential Energy consulted closely with consumers in formulating its proposal. Several consumer groups indicated their support for Essential Energy’s initiative and collaborative approach.

“This outcome is a great example of how engaging with consumers in a revenue setting process can benefit everyone, and it’s a process being applied more broadly to other network decisions.

“This is the type of approach the AER is keen to model with network businesses to drive a more efficient reset process across the National Energy Market,” she said.

Issued date: 
31 May 2018
AER reference: 
NR 16/18
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