The Australian Energy Regulator has elected to slash the NSW power network companies proposed capital and operating expenditure for 2014-19 period, with residential and small business consumers expected to see reductions of 10% in their power bills.
AER chairman Paula Conboy said: “We estimate that our draft decisions, if implemented, would reduce annual electricity bills for a typical residential household living in NSW, on average, by $219 (10 per cent) in 2015–16.
“Similarly, annual electricity bills for small business customers, such as shop owners, would reduce by an average of $360 (10 per cent) in 2015–16. These reductions would be followed by small increases in each of the three subsequent years.”
The draft decisions go a long way towards bringing network businesses’ revenues back down towards levels that prevailed prior to the debacle that was the advent of the new national regulatory rules brought in under the Howard Government’s watch in 2007. As the charts below illustrate, most NSW network businesses experienced huge growth in their allowable revenue in the prior five year regulatory ruling even as power demand plateaued. The AER in its draft decision says it plans to largely unwind this cost explosion. Time will tell whether these draft decisions are watered down in the final decision. No doubt both the networks and NSW Treasury working towards privatisation of these networks will protest vigorously.