Just in case NSW Premier Mike Baird was looking for another reason to sell his state’s electricity poles and wires, Australian Energy Regulator Paula Conboy has delivered a damning verdict on power providers.
With new rules in place, she released a benchmarking study which looks at the relative performance of different states’ power distribution and concluded the two privatised networks, Victoria and South Australia, were the most efficient.
The two worst performers were Queensland and NSW, which are both earmarked for sale.
Up to 50 per cent of the expense of electricity at retail level is accounted for by transmission costs, so if the distribution works better, then that translates into cheaper prices.
Just for good measure, Conboy released her draft determination for the NSW distributors and slashed allowed capital expenditure by up to 38 per cent, which works out at delivering a 10 per cent cut at retail level.
This is a draft report and there is time for Ausgrid, Endeavour Energy and Essential Energy to come back with new arguments, but the writing is on the wall.
Granted, a tough regulatory decision won’t boost sale prices for Baird, but at least the decision will be out ahead of next year’s sale and that provides some certainty.
Today’s ruling would not have come as a great surprise to anyone in the game.
Baird has UBS and Deutsche doing a scoping study on the sale which is due after the next NSW election, in March next year.
This article was first published in The Australian. Reproduced with permission.