Elements of the Australian Energy Regulator’s 30 April determinations will be appealed by Ausgrid, Essential Energy and Endeavour Energy, according to Networks NSW CEO, Vince Graham.
“The AER’s final determinations imposed significant cuts to capital and operating programs and the revenue required to operate safe and reliable electricity networks in NSW,” he said.
“The Board of each NSW network business has carefully considered the implications of the AER’s final decisions and do not believe the AER has followed the National Electricity Rules designed to provide safe, reliable and affordable electricity to 3.3m electricity consumers in NSW.
“The three networks will not appeal the $731m cuts to capital expenditure included in the AER’s final determinations.
“We will, however, appeal the average annual cuts of $324m to operating expenditure due to the impact on vegetation and bush fire risk mitigation programs across the state and the AER’s decision not to provide a workable transition plan to implement continuing efficiency improvements.
“We believe the AER has made serious material errors in its final determinations including the use of flawed and unreliable benchmarking to justify cuts to operating expenditure.
“These cuts to forward operating expenditures are compounded by the AER’s decisions to retrospectively cut $876m in revenue from this year’s budgets ten months into the financial year.
“We are also seeking a review of the cost of capital allowed by the AER because of its decision to cut the allowed interest rate on debt below the actual interest rate of our debt portfolio.
“Under all circumstances, we plan to continue our efficiency reforms designed to safely drive downward pressure on electricity prices.
“Since the NSW Network Reform Program began in July 2012 we have cut $3billion dollars from AER approved capital and operating programs. We have safely removed more than 3000 jobs and we proposed to the AER further reductions of 2200 jobs by June 2019.
“Unfortunately, the AER rejected Networks NSW submissions and imposed retrospective cuts to operating expenditure of $1,622m across our network businesses for the five years through to June 2019 leaving an estimated 2750 jobs unfunded from July 2015.
“Networks NSW overriding objective is to protect the long term interest of electricity consumers by balancing the need for safe, reliable and affordable electricity networks. We don’t believe the AER’s determinations meet these objectives,” he said.
Legal appeals will now be lodged with the Australian Competition Tribunal today and the Federal Court by 28 May.
“We note that ACTEW/AGL has already announced its decision to lodge legal appeals with the Federal Court and the Australian Competition Tribunal against its AER final determinations,” he said.
Ausgrid, Essential Energy and Endeavour Energy will submit interim pricing proposals this week to the AER, to apply from 1st July 2015. These interim pricing proposals will be based on the AER’s 30th April final determinations.