The Australian Energy Regulator (AER) has made a final determination which reduces the revenues of Energex and Ergon Energy (QLD).
The AER’s final decision allows Energex to recover $6599.9 million from its customers over five years, which is 16.2 per cent less revenue for Energex than the proposal put forward by the company.
The ruling will create more stability for electricity prices but could also lead to job losses. The Queensland Government will direct Energex and Ergon to lock in this outcomes and not appeal the AER decision.
Energy Minister, Mark Bailey, said “the Queensland Government remains resolutely committed to no forced redundancies, and we will consult and work with the representatives of our workforce – the unions. Therefore any changes in staff numbers will be achieved through voluntary redundancies and natural attrition.”
Mr Bailey said the ruling should result in stable Queensland electricity prices over the next few years.
“The Newman years of painful electricity price surges are over – enough is enough,” he said.
“We have already seen 2015-16 electricity prices decline on average by half a per cent on average for a typical Queensland customer.
“To ensure Queensland electricity customers are able to obtain the benefit of stable electricity prices over the next five years the Government has taken the decision to direct the network businesses not to appeal specific elements relating to the Weighted Average Cost of Capital (WACC) and Gamma, of the AER’s final revenue determinations.
“This morning I have spoken the Chairs of both Boards to inform them of the Government’s decision. They both understood and accepted the Government’s decision.”
Mr Bailey said the Government considers that the AER’s decision in relation to WACC is balanced, in that it provides the network businesses a reasonable rate of return on their assets as well as providing stable electricity prices over the next five years for customers.
“While the Government acknowledges that the network businesses will need to make adjustments to reflect the lower WACC, it is confident that the network businesses will work with customers to deliver innovative solutions and continue to deliver efficient energy services,” he said.
“The AER’s decisions to reduce Energex and Ergon Energy’s revenues will require them to continue to make further efficiency improvements.”