A new determination by the Australian Energy Regulator (AER) has set the revenue that Energex and Ergon Energy can earn and therefore the prices they can charge customers from 1 July 2025.
The AER said that its final decision on the revenue proposals submitted by the two Energy Queensland subsidiaries balances affordability and investment in a safe and reliable network.
Energex’s distribution network supplies electricity to south-east Queensland including Brisbane, the Gold Coast and Sunshine Coast, while Ergon Energy’s distribution network supplies north, central and the rest of southern Queensland.
Electricity distribution network businesses are required to submit revenue proposals to the AER every five years, outlining how much they intend to recover from consumers over a five-year period to provide safe, reliable and secure electricity services and address important emerging issues such as network cyber security, climate resilience and integration of consumer energy resources.
AER Chair, Clare Savage, said the final decisions seek to balance affordability and efficient and prudent investment that delivers a safe and reliable network to meet the long-term needs of consumers.
“Cost-of-living pressures and affordability concerns continue to be front of mind for households and small businesses,” she said.
“We have rigorously scrutinised both Energex and Ergon Energy’s proposed expenditures to ensure consumers pay no more than necessary for a safe and reliable power supply, while enabling businesses to address important emerging issues such as network cyber security, mitigating the risks of the increasing frequency of extreme weather events and integration of consumer energy resources,” Ms Savage said.
The final decisions allow Energex to recover revenue of $8.995 billon from consumers and Ergon Energy to recover revenue of $8.58 billion from consumers over the 2025–30 period.
The estimated impact of these final decisions is a total nominal increase to the typical residential customer’s electricity bill in Queensland of around $48 a year over 2025–30. For small business customers, the impact will be an increase on average of $97 a year.
The increase in the allowed revenue for both businesses in nominal terms is significantly impacted by higher inflation and higher interest rates, contributing to around 50 per cent of the total change in revenue for the next regulatory period compared with the current period (2020–25).
Compared to the allowed revenue in the 2020–25 period, the 2025–30 allowed revenue is $2.876 billion (or 47 per cent) higher for Energex and is $2.57 billion (or 42.8 per cent) higher for Ergon Energy.
After the businesses submitted further supporting evidence, the AER said it accepted Energex’s proposed total forecast capital expenditure, while its alternative forecast for Ergon Energy’s prudent and efficient capital expenditure is 5.3 per cent higher than the AER’s draft decision.
The total approved capital expenditure for Energex is $717 million more for the 2025–30 period compared to what was allowed for in 2020–25, and operational expenditure is $171.3 million more.
For Ergon, the total approved capital expenditure is $1.665 billion more than what was approved in 2020–25, and operational expenditure is $42.9 million more.
“The final decisions include additional capital expenditure on safety and reliability compared to our draft decisions. Ergon and Energex can now decide how to best provide distribution services that fulfil their obligations, including to maintain the safety and reliability of the network,” Ms Savage said.
The decisions come after an extensive regulatory process including consultation and submissions following draft decisions released in September 2024.
The final decisions also highlight the importance of consultation and engagement with consumers by network businesses to balance service levels and prioritise areas of expenditure.
Ms Savage said that the AER heard from stakeholders that although engagement was comprehensive on matters such as incentive schemes, public lighting, and tariffs, it did not cover the key drivers of revenue for the 2025–30 regulatory period. Additionally, affordability and value for money were key considerations for consumers, given current cost-of-living pressures.
“It is vital for network businesses to engage meaningfully and comprehensively with consumers throughout the process to ensure expenditure and tariff proposals meet their needs,” Ms Savage said.
The AER said that changes have been made since its draft decision to shift the default network tariff to a time of use rather than a demand charge for customers with a new smart meter. This responds to the concerns raised by a number of consumer groups as well as the Australian Competition and Consumer Commission’s evidence that consumers on a demand charge pay significantly more than the Default Market Offer.
Existing customers with a demand charge will be transferred to a time of use network tariff over six months from 1 July 2025.
In acknowledging the AER’s determination, Energy Queensland CEO, Peter Scott, said the safety and reliability of the electricity network is paramount.
“The network component of a customer’s energy bill only accounts for about one third of the total bill.
“Ergon Energy Network and Energex have always prioritised maintaining and enhancing their infrastructure to ensure that communities across Queensland have access to safe, reliable, and affordable electricity.”
Mr Scott said Energy Queensland is committed to delivering the essential upgrades required to address end-of-life infrastructure, manage increasing demand, and enhance resilience against extreme weather events that are part of life in Queensland.
He said Energy Queensland will review the outcome of the decisions and adjust its plans while ensuring safety remains front and centre.
“During our extensive consultation with customers and stakeholders, they told us affordability is their number one concern, and that at the same time they expect us to uphold reliability, resilience, service, and safety,” he said.
“With this in mind, we have sought to strike the right balance between investing in the network to provide clean, reliable and smart electricity and efficiently delivering electricity services in the most affordable way.”
