Customers win out with AER revenue decisions

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The Australian Energy Regulator (AER) has remade the final decision on the amount of revenue that Ausgrid is entitled to recover over the 2014-19 regulatory period, as well as remaking the draft decision for the Jemena’s 2015-20 access arrangement period.

This is consistent with the AER’s draft decision, issued in November 2018, and means Ausgrid can recover total revenues of $9.1 billion from its customers, resulting in $310.9 million being returned to customers in the next regulatory period (2019-24).

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

In 2015, Ausgrid proposed to recover $12 billion from consumers over the 2014-19 regulatory period, but the AER approved the significantly lower amount of $8.8 billion in its final decision. Legal action followed, resulting in the AER’s 2015 final decision being set aside by the Australian Competition Tribunal.

The revised amount to be recovered from consumers is $341.1 million above what the AER approved in its 2015 decision. Under the interim arrangements that were put in place, Ausgrid recovered approximately $652 million more revenue than was set out in the 2015 final decision.

In 2015, Jemena proposed to recover $2.6 billion from consumers over the 2015-20 access arrangement period, but the AER approved the lower amount of $2.2 billion in its final decision. Legal action followed, resulting in the AER’s 2015 final decision being set aside by the Australian Competition Tribunal.

The AER has remade this set aside decision and if implemented in full, JGN will be allowed to recover $2.2 billion from its customers over the 2015‑20 access arrangement period.

If implemented this will result in a revenue allowance of $17.6 million (or 0.8 per cent) above the AER’s 2015 final decision after incorporating updated information, and $169 million ($2019-20) as at 30 June 2020 being returned to consumers in the next access arrangement period (2020‑25).

Ms Conboy assured consumers they would not be paying more than what the final decision has provided for.

“This outcome is a great example of how engaging with consumers in a revenue setting process can benefit everyone, and it’s a process being applied more broadly to other network decisions.

“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,” Ms Conboy said.

Under a separate determination process, the AER is expected to release its final decision on Ausgrid’s revenue proposal for the next (2019‑24) regulatory period at the end of April 2019 after considering Ausgrid’s revised regulatory proposal and stakeholder submissions.

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