The AER has cut Ergon Energy and Energex's proposed revenues for 2025-30.

The Australian Energy Regulator (AER) has published draft decisions on the 2025-30 revenue proposals submitted by Ergon Energy and Energex, both subsidiaries of Energy Queensland. 

The revenue proposals, which are submitted every five years, outline the costs that these electricity distribution companies seek to recover from consumers over the next regulatory period.

For the 2025-30 period, the AER's draft decisions recommend slightly reduced revenues for both companies compared to their initial proposals. 

Ergon Energy's proposed revenue of $8.37 billion was reduced by $156.4 million, and Energex's proposal of $8.70 billion was cut by $194.2 million. 

These reductions represent a 1.8 per cent decrease for Ergon Energy and a 2.2 per cent decrease for Energex.

The AER has highlighted the need for efficient investment in network safety, reliability, and resilience, while balancing consumer interests. 

It said that “businesses need to invest in their networks”, but such investments should not come at an excessive cost to consumers. 

The draft decisions also reflect the regulator’s support for enhancing network resilience, improving cyber security, and integrating consumer energy resources.

A major focus of the AER's review was Ergon Energy's overspend during the 2018-2023 period, when its capital expenditure exceeded forecasts by $1.19 billion. 

While the AER acknowledged the need for increased spending on pole defect management, it concluded that Ergon Energy's overall expenditure during this period was neither “prudent” nor “efficient”. 

The draft decision ensures consumers will not bear the full cost of this overspend.

The AER also suggested reductions in forecast replacement and augmentation expenditure for Ergon Energy and Energex during 2025-2030. 

It noted that the spending plans in these areas did not fully align with efficient investment practices. 

The regulator is treating its draft decisions as placeholders and is encouraging the companies to submit more supporting information in their revised proposals.

Ergon Energy and Energex have until 26 November 2024 to respond to the draft decisions with revised proposals. 

The AER will hold public forums in October to discuss these decisions and is inviting submissions from stakeholders by 17 January 2025. 

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