AER seeks to mitigate risk in Evoenergy gas draft decision

The Australian Energy Regulator's (AER) draft decision for Evoenergy's 2021-26 access arrangement provides stable gas network charges while taking steps to manage the risk of falling gas demand over time.

“The ACT government has introduced new carbon abatement measures which will limit the number of new gas connections and incentivise households to switch to electricity. These initiatives are likely to reduce gas demand in the ACT and leave fewer customers to cover the cost of the network in future. There is a risk that future customers will face substantial increases in network charges. 

“The AER is taking a precautionary step and addressing this risk by allowing Evoenergy to recover the cost of new investments over a shorter period of time. The cost of doing this is largely offset by capital expenditure reductions to leave network charges broadly unchanged," said AER Chair, Clare Savage.

The draft decision largely supports Evoenergy’s proposal and represents an overall revenue reduction of $3.1 million (1.0 per cent) on what Evoenergy proposed.

If this draft decision is confirmed at the final decision, Evoenergy is expected to recover $311.9 million in revenue from consumers over the 2021–26 period and consumers would see savings upfront in the first year, before prices stabilise over the remaining four years.

The AER estimates that average annual bills for Evoenergy’s consumers would reduce by $26 for residential consumers and $232 for small business consumers in the first year, ending 30 June 2022.

After this, there will be annual average bill increases of $8 for residential consumers and $69 for small businesses consumers in each of the remaining four years of the 2021–26 period.

“Before finalising our decision we would like more information from Evoenergy on their forecasts for gas usage and certain aspects of capital expenditure,” said Ms Savage.

The AER invites submissions by 17 February 2021 and the final decision is due by 30 April 2021.

“Evoenergy has done a good job of listening to its consumers and we encourage consumers to continue to contribute to this process and make their voices heard.

“Consumers have the right to expect safe and reliable energy that costs no more than necessary and I believe this draft is a solid foundation for a final decision that delivers for ACT gas users,” said Ms Savage.

This is a draft decision and is subject to change due to a range of factors including the economic impacts of the COVID-19 pandemic and submissions received through consultation.

About the AER

The Australian Energy Regulator (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: 
27 November 2020
AER reference: 
NR 45/20
General enquiries - Evoenergy 2021-26 Access arrangement