The Australian Energy Regulator (AER) has announced final decisions regarding the amount of revenue Victoria’s electricity networks can collect from their customers over the next five year period from 2021–26.
The revenue will be used for infrastructure projects and upgrades including replacement of ageing wooden power poles, technology to protect against bushfires, and support more rooftop solar panels through a new revenue determination.
Chair of the AER, Clare Savage, said the revenue allowed would support the businesses – AusNet Services, CitiPower, Jemena, Powercor, and United Energy – in continuing to deliver safe and reliable electricity while they adapt to a rapidly changing power grid.
“Our energy grid is transitioning with significant technological change, new energy sources and emerging challenges,” Ms Savage said.
“There is rapid uptake of both grid-based and distributed renewable energy resources such as rooftop solar, households creating and storing their own electricity, and more electric vehicles on our roads.
“With all of this change, we need to ensure that the long-term interests of consumers continue to be protected.
“A focus for the AER has been to ensure consumers are protected during this transition and that consumer voices are being heard by the network businesses through improved customer engagement.
“The revenue determinations respond to these changes and support the businesses in adapting for new challenges while continuing to deliver safe, reliable and efficient services.”
The revenue determinations enable the network businesses to fund key services for customers including:
- Replacement of ageing wooden power poles across CitiPower, Powercor and United Energy to enhance safety, including $148 million for Powercor to ramp up its replacement program
- Support for all businesses for the entry of renewable energy from rooftop solar panels into the electricity grid as the Victorian Government ramps up its Solar Homes Program, with one in five homes already having solar panels and more expected
- Continued installation of new technology, Rapid Earth Fault Current Limiters, in the Jemena, AusNet Services and Powercor networks to reduce bushfire risk from power poles. This technology detects power line falls and reduces power to electric lines that might otherwise start a bushfire
The AER will reduce the amount of money four out of the five businesses can collect from their customers in 2021–26 compared to the previous five year period. This is likely to provide a drop in the network charge component of Victorian electricity bills in 2021–22 by up to $60 for households and $267 for small businesses compared to charges in 2020.
AusNet Services’ revenue will increase by 1.6 per cent over the next five years. This is due in part to the significant investment AusNet Services has made in reducing bushfire risks in recent years, and also because of allowed depreciation recovery over the next five years. AusNet Services has forecast a reduction in its capital expenditure of 20 per cent over the coming five years (compared to the previous five years), which we expect will reduce pressure on network charges into the future.
Annual prices for each business, which will apply from 1 July, 2021, will be different from the network charge estimates in these determinations. This is because a range of other factors contribute to annual prices including incentive scheme payments and annual adjustments, as well as changes in transmission and jurisdictional scheme costs.
This is the first time distribution network charges have been calculated on a financial year basis (revenues were previously assessed on a calendar year basis), and so benefits have already been passed on to consumers from 1 January 2021.
For a summary of the Victorian electricity distribution revenue decisions 2021-26, click here.