Australian Energy Regulator draft determination

Minister for Natural Resources, Mines and Energy and Minister for Trade
The Honourable Stephen Robertson
30/11/2009
Australian Energy Regulator draft determination

The Australian Energy Regulator (AER) today released a draft determination on forward funding submissions from Queensland's electricity distributors, Energex and Ergon Energy.

The Minister for Natural Resources, Mines and Energy Stephen Robertson said he would closely consider the draft determination, and he encouraged the public to get involved in the consultation period.

"Electricity distributors must balance the demands of a growing population and increasing electricity consumption, with community expectations that they will keep power prices within affordable limits," Mr Robertson said.

"Nobody likes to see prices rise, but we must ensure a reliable electricity supply continues to meet the demands of an increasingly energy-hungry community, in which we live," he said.

"While the population of South East Queensland increased by 33% in the twelve years to 2009, peak electricity demand increased by 99% in the same period, placing enormous pressure on electricity suppliers.

"The draft determination will have an impact on electricity prices in Queensland, although the full extent of the impact will not be known until early next year, as a range of factors affect the bottom line on consumer's power bills.

"From 1 July 2010, the AER will become the economic regulator of Queensland's two electricity distribution businesses, Ergon and Energex.

"As such, the AER will play an important role in balancing the proposals of electricity distributors with community submissions, to make a determination that meets the long term needs of the supply network while considering the immediate cost implications for consumers.

"The AER will consider the proposed expenditure and revenue of electricity distributors and determine whether they are appropriate, guided by the National Electricity Rules," Mr Robertson said.

Electricity pricing is comprised of energy costs, retail costs, transmission costs and distribution costs (around 40 per cent of the total).

Following a second period of consultation and review the AER will set a distribution pricing regime, to remain in place until 2015.

Energex and Ergon submitted proposals for the AER's consideration in July 2009, including plans for continued investment in the electricity distribution network.

The distributors have jointly proposed $12.5 billion in capital expenditure and $3.7 in operational expenditure, to ensure a secure and reliable power supply.

Both distributors forecast a continuing rise in electricity consumption across the state.

Energex expects peak demand in South East Queensland to grow by 4.36 per cent each year (or about 20 per cent in the next five years) while Ergon Energy has predicted slower growth in regional Queensland, at an average rate of 2.93 per cent per annum.

While more Queenslanders are using energy-intensive appliances, the growing population is expected to bring a 2.07 per cent per annum rise in the number of electricity consumers in South East Queensland, with an 8.14 per cent rise in regional Queensland by 2015.

The Queensland Government is committed to reducing electricity consumption by encouraging the uptake of clean and renewable energy initiatives and demand management programs, such as the climate smart home service and the Queensland Solar Hot Water Program.

The draft determination is available online at www.aer.gov.au.

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