The Australian Competition and Consumer Commission today issued its draft decisions on the revenue caps for TransGrid and Energy Australia, the transmission network service providers in the NSW and ACT region of the National Electricity Market.
"The decisions accommodate a large increase in investment in the transmission network", ACCC Commissioner, Mr John Martin, said. "The draft decisions provide for total investment in NSW and the ACT worth about $296 million on average each year, a significant increase from the current level of about $237 million per year.
"Investment will total nearly $1.5 billion over five years, allowing TransGrid and EnergyAustralia to respond to the large increases in forecast demand while improving the reliability of their transmission networks by replacing ageing assets".
In making its decisions the ACCC took into account submissions from interested parties and reports from independent consultants.
TransGrid
"TransGrid will undertake the bulk of the investment expenditure ($1.3 billion) adding around 45 per cent to the value of their asset base", Mr Martin said. "This is in addition to the substantial investment of $1.2 billion undertaken over the past five years giving a total investment of $2.5 billion.
"TransGrid's investment expenditure is accompanied by modest price increases of less than three per cent in the first year and an average increase of about one per cent in subsequent years, in real terms", Mr Martin said. "The modest price increases arising from the draft decision compare to TransGrid's proposed price increase in the first year of about 13 per cent and an increase on average of about two per cent in subsequent years.
"The revenue set by the ACCC for this draft decision is on average about 14 per cent in real terms below that sought by TransGrid".
EnergyAustralia
"EnergyAustralia has only a small portion of the transmission assets in the NSW and ACT region, and EnergyAustralia"s average investment levels of $37 million per annum reflect that", Mr Martin said. "However that still represents investment of $184 million over the regulatory period, in addition to investment of $135 million undertaken in the five years to 2004.
"The ACCC's draft decision will increase EnergyAustralia's transmission charges by an average of 3.5 per cent per annum, less than the 6.8 per cent average sought by EnergyAustralia, in real terms", Mr Martin said. "This is equivalent to a total price increase in real terms of 18 per cent over the regulatory period.
"EnergyAustralia's transmission charges may rise by up to 18 per cent in real terms over the five years to 2009, but around 60 per cent of this increase is directly attributable to the increase in their regulatory asset base due to a number of EnergyAustralia's assets being reclassified from distribution to transmission", Mr Martin said.
The ACCC invites comments on the draft decisions. The TransGrid Transmission Network Revenue Cap 2004-2009 and the EnergyAustralia Transmission Network Revenue Cap 2004-2009 draft decisions will be available from the ACCC website, see below. The closing date for submissions is Friday 2 July 2004.