Following a comprehensive engagement process, the AER today released its 2025 Annual Benchmarking Reports for electricity distribution and transmission.
The Annual Benchmarking Reports are used by the AER and industry to benchmark distribution network service providers’ (DNSPs) and transmission network service providers’ (TNSPs) productivity over time, against other networks and the economy. The data available for the 2025 Annual Benchmarking Reports covers years between 2006–24.
Key findings in this year’s reports included that distribution industry productivity decreased by 3.8% and transmission industry productivity fell by 3.3% in 2024. In both cases, this was reflective of increasing operational expenditure. Declining productivity may also be driven by external factors such as jurisdictional regulatory obligations, weather events, and the changing way we use electricity networks.
This year’s reports do not include any methodological updates. However, we have updated the output weights used in both DNSP and TNSP productivity modelling. This update was supported by the recommendations of the 2024 Independent Review of Non-Reliability Output Weights and highlighted in the 2024 Annual Benchmarking Reports. The update has changed output weights used in DNSP benchmarking resulting in a material impact on relative productivity among DNSPs, with only minor changes to weights used in TNSP benchmarking.
We have responded to stakeholder interest around the updated DNSP output weights by performing additional analysis, testing for robustness and reliability and have concluded that the updated output weights remain fit-for-purpose and reliable. Results of this detailed analysis are published alongside our reports in the form of a memorandum.
The report also identifies priority areas for future development work, including in response to stakeholder submissions received during the development of this year’s reports. The key piece of development work we have progressed this year has been the review of the opex econometric models, for which we have recently released a report by our consultant Quantonomics. We are seeking submissions on Quantonomics’ report by 13 February 2026.
Background
The Annual Benchmarking Reports support the AER’s work in regulating electricity networks in the long-term interests of consumers.
The reports include the results from a variety of benchmarking techniques that we use to analyse the productivity of DNSPs and TNSPs individually, and as an industry, in the National Electricity Market.
We use these results to understand the drivers of trends in electricity network efficiency over time and changes in these trends. This can help us understand why network productivity is increasing or decreasing and where best to target our expenditure reviews of network revenue proposals.
Our benchmarking is also used to inform our assessment of the efficiency of network expenditure proposals.
Where we find a network’s costs to be materially inefficient, we may use the benchmarking to adjust its operating expenditure down to a more efficient level, reducing how much revenue the distribution network can recover from its customers through electricity bills.