The Australian Competition and Consumer Commission today issued its final decision on a revenue cap for South Australia's electricity transmission services, owned and operated by ElectraNet SA.
The decision caps ElectraNet's earnings for 2002/03 at $148 million, increasing to $181 million in 2007/08, based on a post-tax nominal return on equity of 11 per cent and an opening asset base of $823 million.
ACCC Chairman, Professor Allan Fels, said the ACCC's decision will save South Australian consumers $278 million over five years.
"The ACCC determined ElectraNet is entitled to $983 million in revenue over the five year regulatory period, compared to ElectraNet's request for $1261 million", he said.
This decision is expected to result in a four per cent decrease in real terms in transmission prices over the regulatory period compared to 2001-02. Had the ACCC allowed the revenue cap requested by ElectraNet, real prices would have increased by more than over 25 per cent over the regulatory period.
The decision also accommodates significant new investment in the South Australian transmission network. It includes revenues to cover the costs (including a rate of return) on $358m (real terms) of new investment over the five years, an increase of about 40 per cent on its asset base. This will allow more low cost electricity to be imported into South Australia, will meet growing demand and will assist in improving reliability of supply.
"The ACCC has also introduced an incentive scheme to encourage ElectraNet SA to maintain or improve its service quality and reliability and has approved ElectraNet's use of a modified network pricing methodology, which provides more efficient pricing signals than the standard approach", Professor Fels said.
The decision does not cover the distribution network assets owned and operated by ETSA Utilities. These assets are the regulatory responsibility of the Essential Services Commission of South Australia. Under the National Electricity Code, the ACCC is responsible for determining the revenue cap for ElectraNet. In making its decision the ACCC considered submissions from industry, government and other interested parties.
The South Australian Transmission Network Revenue Cap 2003-2007/08 final decision is available from the ACCC website.