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Regulating a reduction in energy bills is good news

The South Australian Council of Social Service (SACOSS) has welcomed the draft decision of the Australian Energy Regulator (AER) on SA Power Networks' regulatory proposal for the 2020-25 regulatory control period, commencing 1 July 2020.

“This draft decision is an important step in the AER’s determination of the amount of revenue that SA Power Networks (SAPN) can recover from its customers over the next five years, and this flows on to the final cost to consumers,” said SACOSS CEO, Ross Womersley.

“In this instance the AER has concluded that, while SAPN should continue with what has been quite extensive discussions with consumers about its proposals for revenue and expenditure, total revenue from customers should be reduced by $309m. If these savings are reflected in the final decision, it should convert to considerable savings in the network costs customers get charged.

“In the lead up to this decision, SACOSS and other consumer groups had raised a number of concerns about SAPN’s original proposals. We are pleased that in many instances the AER has listened and is proposing reduced costs in a number of those areas,” Mr Womersley said.

“As a result, the AER’s draft decision now discusses how households would see a reduction in their annual energy bills of around $63 next year. With lower-than-inflation increases projected in the following years, SACOSS estimates that in real terms the savings could be a $100 a year by 2024-25.

“That will be good news for energy consumers, and particularly those on low incomes with limited room to move in the household budget."

The key areas that this draft decision reflects SACOSS’ requests are:

  • Information and Communication Technology (ICT) capital expenditure revised down 30.8% from $284.6m to $196.8m;
  • Expenditure to strengthen the network (Augex) revised down 29.4% from $265.4m to $187.3m (no reliability improvement spending was approved, in line with ESCOSA’s decision to maintain reliability levels);
  • Future network (DER management) capital expenditure down 30.0% from $106.6m to $74.7m. While the AER have accepted forecast capital expenditure of $30.3m for SA Power Networks' Distribution System Operator (DSO) transition program, the AER decided that some of the specific expenditure lacked the integration with the system as a whole;
  • The AER have used what SACOSS regards as more reliable forecasts of real labour price increases in the utilities sector (prepared by Deloitte Access Economics) as opposed to SAPN’s averaged labour growth estimates.

“In the final stages of this process, we hope that SAPN continue to have deep engagement with consumers and that the AER continues its diligence in paying attention to the issues consumer groups have been raising. As today’s draft decision shows, a sound and transparent regulatory process is essential for a strong energy future and can deliver direct savings for consumers,” concluded Mr Womersley.


Published Date: 
Tuesday, 8 October 2019