Electricity Prices Continue to Stabilise

Filed under Energy, News ~ by Press on  1 May 2019

Improved operational efficiencies at three New South Wales electricity distribution companies will result in stable network costs for consumers after the Australian Energy Regulator (AER) released its final determination for Ausgrid, Endeavour Energy and Essential Energy for the 2019-24 regulatory period.

AER board member Jim Cox said the key focus of the determinations is ensuring that consumers pay no more than is necessary for safe and reliable electricity.

Charges for electricity network services will remain largely stable over the next five years as networks are required to become more efficient and focused on what their customers are willing to pay for.

Today’s decisions continue the downward momentum since network charges peaked in 2012. Since then, AER regulated network costs have fallen as businesses have become more efficient and responsive to their customers,” Mr. Cox said

The decisions allow the companies to recover the following from consumers over the 1 July 2019 to 30 June 2024 regulatory period:

  • Ausgrid – $7703.3 million
  • Endeavour Energy – $4201.2 million
  • Essential – $5079.3 million

The network tariffs set under this determination make up about one third of the average electricity bill in NSW.

As a result of these decisions, the AER estimates that, compared to the end of the current regulatory period, by the end of the 2019-24 regulatory period the average annual electricity bill will be (assuming non-network components of the electricity bill stay the same):

  • $67 less for a residential customer and $156 less for a small business customer on Ausgrid’s network (or 3.3 per cent less in both cases);
  • $24 less for a residential customer and $44 less for a small business customer on Endeavour’s network (or 1.3 per cent less in both cases);
  • $24 more for a residential customer and $111 more for a small business customer on Essential’s network (or 1.2 per cent more in both cases).

Mr. Cox said that the decision came after significant public consultation with the distribution businesses, stakeholders and consumers.

This decision provides sufficient revenue to enable the NSW distributors to operate their networks reliably and safely. It takes account of the requirement to invest in the networks to cater for the increasing use of renewable energy.”

Consumers will be paying for network investments such as these for decades to come, and it is our role to ensure they pay no more than they need for these services,” Mr. Cox said.

Craig Memery of the Public Interest Advocacy Centre (PIAC) said the announcement represents a fair outcome for NSW consumers, and will help curb rising household energy bills.

Overall, this determination is welcome news for NSW consumers,” said Mr Memery, Team leader in PIAC’s Energy + Water Consumers’ Advocacy Program.

It builds on the downward pressure we have seen on electricity prices since the peak of 2012, as the businesses have been pushed to become more efficient.”

The AER’s determination sets out the amount of revenue electricity distributors are able to recover from consumers from 1 July 2019 to 30 June 2024. Distribution prices make up around a third of the average energy bill.

PIAC represented NSW energy consumers in detailed consultations with the three NSW electricity distributors (Essential Energy, Ausgrid and Endeavour) and the AER throughout the determination process.

More open and honest consultation with consumers and consumer advocates such as PIAC throughout this process has resulted in hundreds of millions of dollars in revenue being taken off the table that might otherwise have been charged to consumers,” said Craig Memery.

That said, there is always room for improvement: consumer engagement must not become an end in itself, and must not end with the regulator’s decision. Consumer engagement must continue to inform how they interact with and meet the needs of consumers on a day-to-day basis.”

The AER’s determination is significant in making energy more affordable and accessible for all consumers, but electricity prices remain a source of financial stress and worry for too many NSW households, and there is more work to be done. PIAC estimates that with the right reforms across the energy sector, NSW energy bills could be 25% lower in 2025 than they were in 2018.”

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