AER issues draft determination on Ergon 2020-25 revenue

The Australian Energy Regulator (AER) today issued its draft determination on how much revenue Ergon Energy can recover from consumers over the 2020-25 regulatory period.

AER Acting Chair Jim Cox welcomed the engagement that Ergon has had with its consumers, but said further engagement with consumers is needed as part of delivering its revised proposal.

“Our concern is to ensure that consumers pay no more than necessary for a safe and reliable electricity supply, and that projects are delivered as efficiently as possible.

We have asked Ergon to engage further with consumers and provide us with more information to justify its expenditure programs.”

AER’s draft decision allows Ergon Energy to recover $5 787.9 million from its customers for the 2020-2025 period.

This is $727.9 million less than the $6 515.8 million Ergon Energy proposed.

If this decisions is implemented, Queensland customers will see the following reductions in network charges in 2020:

  • $102 a year (residential)
  • $131 a year (small business)

Network charges will only increase in line with inflation over the next five years. In 2025 network charges will still be $64 (residential) and $82 (small business) below the 2019 level.

“The draft decision recognises that the way Queenslanders engage with electricity is changing and that networks like Ergon Energy have to adjust their business accordingly.

“However, Ergon Energy needs to better explain proposed changes to network tariffs to its customers and reflect the circumstances of its network.

“Ergon Energy is also proposing to spend significant sums on an Intelligent Grid Enablement Program that will provide a framework to manage the data of its LV network. However we require further information from Ergon Energy to enable us to assess this proposed expenditure,” said Mr. Cox.  

Ergon Energy now has the opportunity to consider our draft decision and submit its revised proposal and supporting material in December 2019.

The AER will make its final determination by 30 April 2020.

About the AER

The AER works to make all Australian energy consumers better off, now and in the future. 

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.

We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.

Issued date: 
8 October 2019
AER reference: 
NR 24/19
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