Regulated Revenue Determination Process
Revenue Determination Process
Every five years, ElectraNet submits a Revenue Proposal to the Australian Energy Regulator (AER) for formal assessment and approval through the revenue determination process. The proposal outlines the program of work and forecast revenue required to maintain and operate a safe, reliable and efficient transmission network.
Once approved, transmission prices are then set to recover this revenue from customers using a methodology approved by the AER.
Preliminary Revenue Proposal 2023-24 to 2027-28
On 14 July 2021 ElectraNet published its Preliminary Revenue Proposal (PRP) for the forthcoming period, which will run from 1 July 2023 until 30 June 2028.
The Preliminary Revenue Proposal summarises our developing plans for South Australia’s electricity transmission network and the essential services we will provide in the coming regulatory period. It is the precursor to our formal Revenue Proposal, which we will submit to the AER in January 2022.
The Preliminary Revenue Proposal sets out our indicative capital and operating expenditure programs and invites views on them from our stakeholders. Between now and January 2022, when we submit our formal proposal, we will further develop and refine our plans and programs and, in so doing, will consider the input of our stakeholders. This is essential to ensure we produce a targeted and well-tested set of proposals that deliver the right outcomes for our customers and that satisfy our aim to prepare a proposal that is supported by our customers and the Australian Energy Regulator.
Final determination 2018-19 to 2022-23
On 30 April 2018, the AER released its final determination on ElectraNet’s Revenue Proposal for the five-year regulatory period commencing 1 July 2018.
In its final determination, the AER accepted ElectraNet’s reduction in transmission charges, which delivers a bill reduction of $17 for a typical residential customer and a $33 decrease for a typical small business customer in 2018-19.
The AER accepted ElectraNet’s proposal to reduce capital expenditure by 39% and its operating expenditure by 9%.
The AER also accepted small amendments to the operating expenditure proposed by ElectraNet in its revised Revenue Proposal which was submitted on 22 December 2017. These changes were in response to new obligations to address system security challenges in South Australia.
We implemented a detailed early engagement program to help us understand the views and priorities of South Australia’s electricity customers. This input was reflected in our plans and Revenue Proposal for the 2019–2023 regulatory period.
More information about the final determination can be accessed on the AER’s website.
Framework and Approach Process
The AER initiates the Framework and Approach process which sets out how the applicable incentive schemes will apply to ElectraNet to encourage efficient investment and performance and how the AER will apply the Expenditure Forecast Assessment Guidelines and the depreciation methodology for the next regulatory period. The AER’s initial paper is available here.
Expenditure Forecast Methodology
ElectraNet advises the AER of its approach to forecasting capital and operating expenditure for the coming regulatory period. A copy of ElectraNet’s Expenditure Forecast Methodology is available here.
Preliminary Revenue Proposal
ElectraNet releases its Preliminary Revenue Proposal containing indicative capital and operating expenditure forecasts and providing an indicative revenue and price outlook. A copy of the Preliminary Revenue Proposal is available here.
Consultation on the Preliminary Revenue Proposal
Stakeholders are invited to provide feedback on the Preliminary Revenue Proposal.
Framework and Approach Paper
The AER publishes a Framework and Approach paper setting out the application of the following:
- Service Target Performance Incentive Scheme (STPIS)
- Demand Management Innovation Allowance Mechanism (DMIAM)
- Expenditure Efficiency Benefit Sharing Scheme (EBSS) and Capital Expenditure Sharing Scheme (CESS)
- Expenditure forecast assessment guideline
- Whether depreciation will be based on forecast or actual expenditure in updating the regulatory asset base
ElectraNet’s Revenue Proposal outlines our forecasts of the capital and operating expenditure that will be required to meet the capital and operating expenditure objectives, to comply with the National Electricity Rules, and to fulfil our other roles and obligations.
The AER publishes and issues paper in which it identifies key issues likely to be relevant to its assessment of our Revenue Proposal.
Public Consultation on Revenue Proposal
ElectraNet’s Revenue Proposal and the AER’s Issues Paper are published for public consultation.
The AER and their Consumer Challenge Panel present their initial views to stakeholders and invite input into the process. ElectraNet is invited to give a summary of the Revenue Proposal.
The AER completes its assessment of our Revenue Proposal publishes its draft determination based on a range of inputs including its own analysis, advice from experts and input from the Consumer Challenge panel and stakeholders generally. The AER must accept our expenditure forecasts if it is satisfied that they reasonably reflect the expenditure objectives in the National Electricity Rules. It includes the revenue ElectraNet will be permitted to earn during the regulatory period.
The AER and the Consumer Challenge Panel present to stakeholders to explain the draft determination.
Public Submissions on Draft Determination and Pre-Determination Conference
Public submissions are published.
Revised Revenue Proposal
ElectraNet’s revised Revenue Proposal sets out revisions made to the Revenue Proposal considering the AER’s draft determination and issues raised by stakeholders.
Public Consultation on Revised Revenue Proposal
The AER publishes our revised Revenue Proposal for consultation.
The AER publishes its final determination setting out the maximum revenue we may recover from customers through regulated transmission charges. It also sets out the AER’s determination of the amount of capital and operating expenditure necessary to meet the capital and operating expenditure objectives in the National Electricity Rules.