AER issues final decisions for Victorian electricity distributors

The Australian Energy Regulator has announced its final decisions on revenues for the five businesses that run Victoria’s electricity networks. The cost of running these electricity networks makes up between 20 and 40 per cent of electricity bills in Victoria.

AER Chair Paula Conboy said the decisions published today lock in consumer savings on household electricity bills by between $50 and $120 over the 2016-20 period.

“The Victorian networks are already among the most efficient in Australia, but we have been able to reduce the revenue sought by networks by over $2.3 billion while allowing sufficient revenue to replace assets where necessary, connect new customers and fund day-to-day expenses.” Ms Conboy said. “The approved business revenues announced today will form the basis of network charges that will apply from 1 January 2017. “

“The key drivers of these decisions are lower metering costs with the completion of the smart meter roll-out phase, and improved financial market conditions since network revenues were last set in 2010,” Ms Conboy said.

Ms Conboy said the decisions also include over $400 million of bushfire safety expenditure for the distributors to manage this risk, including expenditure to meet existing regulations in Victoria. Provision has been made to increase this funding if new bushfire safety regulations take effect.

The decisions follow an intensive 13 month review process, drawing on technical expertise within the AER and extensive public consultation.

“The unprecedented level of public consultation follows reforms undertaken by the AER to guide network businesses to better engage with their customers.”

“Together with the AER’s own consumer challenge panel, the decisions have been greatly informed by the quality of stakeholder engagement we have received,” Ms Conboy said.

“The AER expects that retailers will pass through these savings. But we also urge consumers to shop around and take advantage of competitive retail market offers to ensure they get the benefits of today’s decisions,” Ms Conboy said.

Victorian customers can compare retail offers with Victorian Energy Compare.

AER Final decision on revenue for 2016–20
Network business Businesses’ revised revenue proposals ($million) AER final decision ($million) Percentage difference Estimated total reduction for average annual bill over 2016–20: Residential Estimated total reduction for average annual bill over 2016–20: Small business
AusNet Services $3835.5 $3130.4 –18.4 % –$98 –$32
CitiPower $1847.8 $1500.3 –18.8 % –$50 –$55
Jemena $1538.2 $1302.1 –15.3 % –$120 –$99
Powercor $3818.0 $3176.4 –16.8 % –$62 –$88
United Energy $2551.2 $2106.1 –17.4 % –$54 –$2

Note: Revenues presented are for standard control services only. Estimated bill reductions include the impact of our decision on metering services.

Issued date: 
26 May 2016
AER reference: 
NR 012/16