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AER releases draft Essential Energy determination

Geoff Helisma | The Australian Energy Regulator (AER) last week released its Essential Energy (EE) draft distribution determination for the 2019 to 24 regulatory control period. The draft determination estimates that, by the end of the period, Essential Energy’s residential and small business customers’ bills would be $70 and $314 higher, respectively, if no changes are made to the draft determination. “Holding all other components of [electricity] bills constant, the average annual electricity bill for a residential or small business customer … would be 3.7 per cent higher by the end of the 2019–24 regulatory control period.,” the determination states. The AER’s estimated annual average residential bill in 2023-24 is $1,970; small business’s is $8,804. Essential Energy’s submission proposed outcomes of $2,048 and $9,150, respectively. The AER determines the total revenue that EE can recover over the period, recommending that EE can “recover $5,292.1 million ($nominal) in revenue from its customers over five years, commencing 1 July 2019” – EE’s proposal, if accepted, would increase electricity bills by 7.5 per cent over the period. The draft determination notes: “Over the current period we have seen Essential Energy make significant progress in improving its efficiency. “Our last decision expressed concerns that its operating expenditure in particular was materially above efficient levels. “This draft decision, which largely accepts Essential Energy’s proposal, reflects not only the considerable efficiency gains it has achieved in both operating and capital expenditure over the current period, but also the strategies and initiatives it now proposes to deliver further efficiencies in expenditure and improvements in productivity over 2019–24.” The AER says it will “continue to work with EE and stakeholders to ensure that our final decision … is in the long term interests of consumers and that EE’s customers are paying no more than they should for safe and reliable electricity”. More information on Essential Energy’s proposal, AER’s draft decision and how to make a submission (closing February 5, 2019), go to: The AER says it “works to make all Australian energy consumers better off, now and in the future; we regulate energy networks in all jurisdictions except Western Australia [and] set the amount of revenue that network businesses can recover from customers for using these networks”. “The distribution network tariffs that will be set by reference to our final decision are only one contributor to electricity bills, and make up around 37 per cent of the total retail electricity bills Essential Energy’s customers pay.”