Increased spending to improve network reliability in urban and rural areas over coming years is a key feature of the Australian Energy Regulator’s (AER) first draft revenue determination for Power and Water.
This is the first time that Power and Water has submitted a regulatory proposal to the AER and there will be further stakeholder consultation as the process progresses towards a final decision. The Northern Territory Government sets retail prices for small customers.
The AER’s draft determination allows Power and Water to recover $758.8 million ($nominal) from its customers over the five years from 1 July 2019 to 30 June 2024, compared to its proposal for $927.9 million.
This is a decrease of $166.2 million ($2018-19) or 19.1 per cent, on allowed revenue for the 2014-19 regulatory period. This amount may change as the AER receives further information from Power and Water and submissions from consumers.
AER board member Jim Cox said the decision reflects input from consumers and other stakeholders gathered during consultation on the determination that prioritised value for money for consumers.
“We have allowed expenditure for improving reliability for poor performing rural and urban areas and to enable the roll out of smart meters on a new and replacement basis.
“At a time when energy affordability is a key concern for all households, the AER has worked with Power and Water and a wide range of stakeholders to make a determination that focuses on the efficient use of consumer’s money,” said Mr. Cox.
Power and Water – and the wider Northern Territory energy market – have undergone extensive changes in recent years with:
- the disaggregation of Power and Water on 1July 2014; and
- the progressive adoption of the national framework, which will continue up until the commencement of the regulatory control period on July 1 2019.
Mr. Cox said the AER understands Power and Water operates in unique circumstances that require suitable infrastructure, but that any spending must be efficient and ensure consumers do not pay any more than they need.
“We recognize that Power and Water manages a small, remote but highly geographically dispersed network that is subject to a number of diverse environmental factors, particularly during cyclone and wet seasons.
“Power and Water’s proposal recognised the business’ past inefficiencies and that there is room for improvement as it continues its drive to reduce costs over time,” he said.
Power and Water now have the opportunity to submit a revised proposal in response to this draft decision by 29 November 2018. Submissions from interested stakeholders on the draft decision and revised proposal are also welcome, and should be lodged by 11 January 2019.