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Decision to ease pressure on electricity bills

The Australian Energy Regulator (AER) Friday released its final determination for the amount Powerlink can recover from electricity customers over the next five years.

Electricity transmission network costs will fall by almost 25% from 1 July, helping to offset the impact of rising wholesale electricity costs in Queensland.

“Powerlink consulted with its customers and proposed substantial savings in operating its distribution network. As a consequence, in our final decision we have been able to accept most of Powerlink’s regulatory proposal, including its capital and operating expenditure forecasts,” said AER Board member Jim Cox,

“We also accepted the methodology proposed by Powerlink to calculate its rate of return, which we have updated to reflect current market conditions,” he added.

The decision reduces the average revenue Powerlink can collect by $240 million each year (in real 2016-17 dollar terms), down from $973 million in 2012–17 to $732 million in 2017–22.

“Most of these savings were identified by Powerlink in its proposal after consulting with its customers. The savings reflect ongoing efficiencies in the operation of the network,” said Mr Cox,

“The AER is supportive of the approach taken by Powerlink in the preparation of its regulatory proposal.

“Powerlink demonstrated a genuine desire to put the interests of its customers first.
This customer focus has allowed for a constructive approach in our scrutiny of the proposal,” Mr Cox said.

Mr Cox said transmission costs account for about 10% of an average Queensland household electricity bill, resulting in an estimated saving of $40 in the first year, other things being equal.

The final determination is slightly higher than the draft determination released in September 2016, primarily due to rising interest rates impacting the cost of capital in financial markets.

Mr Cox said Queensland’s monopoly transmission and distribution networks contribute the largest amount to what consumers pay for a safe and reliable energy supply.

“This final determination provides network revenues that will still allow for appropriate investments in infrastructure without consumers having to pay more than necessary for safe and reliable electricity,” Mr Cox said.

Mr Cox said the revenue allowed includes funding for network augmentation, asset replacement and capital expenditure on new technology.

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