Energex has submitted a five-year funding proposal to the Australian Energy Regulator that aims to achieve a balance between price and maintaining high service standards.
Energex Chief Executive Officer, Terry Effeney, said a key focus of the company’s 2015-20 Regulatory Proposal was to deliver price relief while achieving better utilisation of the existing network and maintaining current service levels, especially in regards to safety and reliability of power supplies.
“On the price front, delivering stability has been the over-arching goal. If approved by the energy regulator, network prices, which are a large component of a customer’s power bill, will rise below the forecast rate of inflation,” he said.
“And if the Queensland Government’s plan to permanently remove the cost of the Solar Bonus Scheme from retail electricity is put in place, our overall revenue requirements will fall by around 15 per cent which will be passed through to customers as real power price reductions.”
Mr Effeney said feedback from thousands of residential and business customers had provided strong community input into the proposal.
Over the past 18 months, Energex has worked actively to inform and consult with customers on the key issues expected to impact on the Energex business over the next five years.
Mr Effeney said the aim was to strike the right balance between the quality of services customers receive and the price paid for the operation of the South East Queensland electricity network.
“To ensure our plans align with our customers’ expectations, we have been working to incorporate customer feedback into the development of the proposal.”
“This has included comprehensive research and consultation with more than 6700 residential and business customers, representative groups, local councils and electricity retailers.”
Mr Effeney said that the environment in which the 2015-20 proposal has been developed was in stark contrast to that from the last Revenue Proposal five years ago.
“At that time customer connections were rising quickly, peak demand was soaring at unprecedented levels, and overall energy use by our customers was on a steady rise.”
“Much has changed in that period. During the last five years we saw a reduction in overall electricity use and peak demand has flattened. The volume reductions have been largely due to changes in customer consumption, the uptake of a range of energy management solutions, and the installation of technologies such as solar power.”
Key details of the 2015-20 Proposal are that Energex will be seeking $1.76 billion across the five year period for operational expenditure and $3.2 billion across the five year period for capital expenditure for the continued maintenance, upgrade, and operation of the South East Queensland electricity network. A nominal weighted average cost of capital (WACC) of 7.75% has been proposed, which is almost 20 per cent lower than the 9.72% approved by the AER for the current 2010-15 regulatory period. A final WACC is set by the AER as part of the approval process.
Energex’s Revenue Proposal will now be assessed by the Australian Energy Regulator, which will hold public hearings seeking community feedback before a final decision is announced in mid-2015.