AER to cut AusNet's revenue

AER draft decision caps amount group can charge customers for electricity by 7%

The Australian Energy Regulator is set to cut the amount Singapore Power’s SP AusNet (SPN) can charge electricity customers by 7% per year from April in Victoria.

The regulator's draft decision caps SP AusNet's revenue at $1.53 billion over three years, from next April - a 4.4% reduction on the total revenue proposed by the network provider.

 AER chairman Andrew Reeves said today the decision could be significant for large industrial customers.

It caps the revenue that SP AusNet - the only electricity transmission network service provider in Victoria - can charge customers  through the transmission network component of an electricity bill.

“Transmission charges are about 5% of residential bills and the draft decision would not have much effect on most customers’ bills," Mr Reeves said.

"However, transmission charges can account for a higher proportion of the bill for large industrial customers and the reductions in this draft decision may be significant for these larger customers.”

The decision would cut average annual transmission charges in Victoria by about 7% over the three-year period  , Mr Reeves said.

SP AusNet’s proposed opex of $607 million was cut to $543 million by the AER.

Agreeing to the proposed opex in full would have seen the Victorian consumer pay twice for works which were funded - but not carried out - in the last regulatory decision, the AER said.

The decision has also seen the AER reject 30% of SP AusNet’s proposed capital expenditure forecast, primarily as a result of uncertainty surrounding the construction of Melbourne's East-West road link, and the knock-on effect on the proposed rebuild of SP AusNet's West Melbourne terminal.

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