Revised AER determination agrees price stability for Essential customers

Consumers are the major beneficiary of the Australian Energy Regulator’s (AER) remade draft decision on the amount of revenue that Essential Energy is entitled recover over the current regulatory control period (1 July 2014 to 30 June 2019).

“We are satisfied this remade decision is in the long-term interests of consumers and will promote price stability at a time where affordability is a key concern for many consumers,” said AER Chair Paula Conboy.

The remade draft decision means Essential Energy can recover total revenues of $5.1 billion from its customers over the five‑year period. Essential proposed this figure and the AER has accepted it in its draft decision.

The remaking of the decision follows the end of limited merits and judicial review processes in May 2017 arising from the AER’s original 2015 decision.

In 2015 Essential Energy originally proposed to recover $6.8 billion from consumers over the 2014-2019 regulatory period, but the AER allocated $5.1 billion in its determination and legal action followed. Key elements of the original determination disputed during the legal action were $737 million for operating expenditure and $277 million in return on debt.

The revised amount to be recovered from consumers is $100 million above the AER’s original determination.

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

“Essential Energy has consulted closely with consumers in formulating its new proposal. A number of consumer groups have indicated their strong support for Essential Energy’s initiative and collaborative approach.

“This outcome is an excellent example of how engaging with consumers in a revenue setting process can benefit everyone. 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.

The AER welcomes further comment from consumers and other stakeholders as it moves toward a final revenue decision. Stakeholders are invited to make written submissions on the draft decision by 6 April.

Essential Energy will soon be submitting its revenue proposal for the next regulatory period 2019-24. 

Issued date: 
14 March 2018
AER reference: 
NR 05/18
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