Decision for SA Power Networks confirmed

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The Full Federal Court has confirmed the Australian Energy Regulator’s (AER) October 2015 revenue decision for SA Power Networks (SAPN) guaranteeing consumer savings delivered in the original decision will stand.

SAPN had proposed recovering $4.5 billion from consumers over the five year regulatory period starting on 1 July 2015, but the AER determined that the distributor required $3.8 billion in order to deliver safe, secure and reliable power to South Australian households and businesses.

SAPN appealed to the Australian Competition Tribunal which confirmed the AER decision on all grounds in October 2016.

The distributor’s subsequent appeal to the Full Federal Court was also dismissed on all grounds.

AER chair, Paula Conboy, welcomed the decision in the long-running legal dispute, which gives South Australian consumers savings from the original 2015 decision.

“We are happy to put this behind us and move forward with our commitment to develop a more collaborative approach to regulation that puts consumers at the heart of all our work,” Ms Conboy said.

“At a time when rising energy costs are a serious concern to households not just in South Australia but across the nation, the AER is working to make all Australian energy consumers better off now and in the future.”

The key effect of the AER decision was to reduce the “poles and wires” component of consumer bills by approximately 10 per cent in 2015-16, which then remains relatively stable in the following years to 2020. Costs associated with SAPN’s poles and wires make up 30 per cent of the typical household power bill.

SAPN’s major areas of dispute related to the rate of return on investment and tax issues ($160 million difference between SAPN proposal and AER decision) and forecast labour costs ($20 million).

The Australian Government’s abolition of the Limited Merits Review process in 2017 means that there will be no more cases of this nature where a distributor disputes discrete elements of an AER’s revenue decision before the Competition Tribunal. 

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