The Australian Competition and Consumer Commission today issued its decision on a revenue cap for Tasmania's electricity transmission services, owned and operated by Transend Networks.
"The decision accommodates a large increase in investment in the transmission network", Mr John Martin, ACCC Commissioner, said. "The decision provides for investment worth about $56 million on average each year, a significant increase from the current level of about $44 million per year.
"Investment will total $307 million over five and a half years, adding more than 50 per cent to the value of Transend's asset base. This will allow Transend to improve the reliability of the transmission network by replacing ageing assets and undertaking significant new developments.
"The ACCC's decision will increase transmission charges by an average of nine per cent per annum. However, this is less than the 11 per cent sought by Transend. The price increases will take effect from 1 January 2004.
"Given that transmission charges represent about 10 per cent of retail electricity prices, the decision will add around 0.9 per cent per year on average to Tasmanian electricity prices.
"Three factors drive the price increases. First, higher investment. This accounts for roughly 40 per cent of the price increase.
"Second, a decision by the Tasmanian government to revalue the asset base. This valuation is binding on the ACCC. The revaluation accounts for roughly 30 per cent of the price increases.
"Third, the transfer of functions from the System Controller* to Transend in 2005, which adds around $5 million per annum to Transend's operating costs".
In making its decision the ACCC considered submissions from industry, relevant Tasmanian authorities and other interested parties.
The Tasmanian Transmission Network Revenue Cap 2004-2008/09 decision will be available from the ACCC website.
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