Northern Territory residents and businesses will receive improved network services, with the Australian Energy Regulator (AER) approving spending for the reliability upgrade in Urban and rural areas.
The decision supports investment in reliability for poor performing areas, the roll out of smart meters on a new and replacement basis, and a program of pole replacements in Alice Springs to address the safety risks associated with pole corrosion.
AER chair, Paula Conboy, said the AER understands Territory utility Power and Water operates in unique circumstances that require suitable infrastructure, but that any spending must be efficient and ensure consumers do not pay any more than they need for safe and reliable electricity.
“We recognise that Power and Water manages a small and remote but highly geographically dispersed network that is subject to a number of diverse environmental factors, particularly during cyclone and wet seasons.
“Power and Water has worked hard to improve its business practices, making significant improvement to its operations and identifying efficiencies which have resulted in lower overall costs.
“They have done a good job in this regulatory process and this determination recognises that Power and Water will continue making efficiencies in the way they operate,” Ms Conboy said.
The determination allows Power and Water to recover $759.3 million over the five years from 1 July 2019 to 30 June 2024, 18.5 per cent less than the revenue allowed by the NT Utilities Commission in the 2014-19 regulatory period.
Power and Water’s distribution network costs account for 44 per cent of the average household electricity bill and 35 per cent of the average small business bills in the Northern Territory.
As a result of this decision, the AER estimates that by 30 June 2024, residential customer bills will fall by $102 (4.1 per cent) and small business customer bills by $319 (3.3 per cent).
The Northern Territory Government regulates retail electricity prices and this determination will provide a key input into how that figure is calculated.
This decision allows higher revenue than the draft decision released in September 2018, after Power and Water provided the AER with further information on forecast capital and operating expenditure.
This is the first time Power and Water has had its forecast spending plans assessed by the AER to determine the level of revenue it can recover to operate its network. As part of this process, Power and Water undertook the largest network-focused customer engagement program in its history and submitted proposals that reflected consumer priorities.
“Power and Water has achieved a great deal in a short time during a period of extensive change to the Northern Territory power market, and we applaud their effort, notably around consumer engagement,” said Ms Conboy.
“At a time when energy affordability is a key concern for all households, the AER has worked closely with Power and Water and a wide range of stakeholders to make a determination that focuses on the efficient use of consumers’ money.”