Regulated Revenue Determination Process
Revenue Determination Process
Every five years, ElectraNet submits a Revenue Proposal to the Australian Energy Regulator (AER), which outlines the program of work and forecast revenue required to maintain and operate a safe, reliable and efficient transmission network.
The AER uses a range of evidence to review and assess the Revenue Proposal, including historic trends of past costs, benchmarking against comparable businesses and expert advice. Once the AER has independently reviewed our costs and investment plans it sets the maximum revenue we are allowed to earn for the regulated services we provide. Transmission prices are then set to recover this revenue from customers using a methodology approved by the AER.
We have implemented a detailed early engagement program to help us understand the views and priorities of South Australia’s electricity customers. This input is reflected in our plans and Revenue Proposal for the 2019–2023 regulatory period. More information is available from our Consumer Engagement information sheet.
ElectraNet is committed to genuine and ongoing engagement with electricity customers. We continue to use a range of methods to engage with our customers and stakeholders, including our Consumer Advisory Panel.
Revised Revenue Proposal 2018-19 to 2022-23
On 22 December 2017, ElectraNet submitted its revised Revenue Proposal in response to the Australian Energy Regulator’s (AER) Draft Decision.
The revised proposal explains how ElectraNet has accepted and applied the Draft Decision and includes a minor revision to its forecast operating expenditure to address new obligations recently imposed on the business to address the growing system security challenges in South Australia.
ElectraNet’s revised Revenue Proposal delivers further price reductions for customers, while continuing to deliver safe, secure and reliable transmission services, and play a central role in South Australia’s ongoing energy transformation.
The revised Revenue Proposal delivers a reduction in transmission prices of 12 per cent, which means the transmission component of the average annual residential electricity bill in 2018-19 will decrease by approximately $20 and $41 for a typical small business customer.
A final determination is due by the AER by the end of April 2018. More information about the determination process and next steps can be accessed on the AER’s website.
The revised Revenue Proposal and supporting information can be accessed below:
Revenue Proposal 2018-19 to 2022-23
ElectraNet’s Revenue Proposal was submitted to the Australian Energy Regulator (AER) on 28 March 2017, outlining our expenditure plans and revenue requirements for the five-year period commencing 1 July 2018.
ElectraNet proposed significant reductions in capital and operating costs, while maintaining a safe, secure and reliable transmission service. The Revenue Proposal was built on the extensive early engagement we had undertaken with our customers and stakeholders, and shaped by their feedback and input.
On 26 October 2017, the AER released its Draft Decision, which accepted most elements of ElectraNet’s Revenue Proposal, including the full operational and capital expenditure forecasts. The Draft Decision is available at the AER’s website.
Our Revenue Proposal can be accessed from the following link: Revenue Proposal – March 2017
Our Customer Engagement Outcomes Report explains how we have incorporated findings and input from our stakeholder engagement into our Revenue Proposal. You can find out more about the responses and input received below:
Preliminary Revenue Proposal 2018-19 to 2022-23
The formal Revenue Proposal builds on ElectraNet’s Preliminary Revenue Proposal (PRP) released in September 2016, which presented our indicative expenditure plans. The PRP was developed to promote effective early engagement with our customers and other stakeholders, develop shared understanding and facilitate feedback to help shape our formal Revenue Proposal.
ElectraNet’s 2016 annual transmission network stakeholder forum provided an overview of the Preliminary Revenue Proposal, together with the Network Vision which outlines the directions and priorities for the transmission network, and Customer Insights Report, which outlines the feedback gathered through the first phase of our engagement program. View the presentation to see what was covered.
Framework and Approach
ElectraNet must notify the AER of the need for the Framework & Approach (F&A) process. The notification is to include ElectraNet’s approach to the application of a number of guidelines and schemes for the next regulatory control period.
Draft F&A published
The AER publishes a position paper on a draft F&A for consultation. This sets out the AER’s proposed approach to the application of the following:
- Service Target Performance Incentive Scheme
- Expenditure Efficiency Benefit Sharing Scheme (EBSS) and Capital Expenditure Sharing Scheme (CESS)
- Expenditure forecast assessment guidelines
- Whether depreciation will be based on forecast or actual capital expenditure in updating the regulatory asset base
Expenditure Forecast Methodology
ElectraNet advises the AER of its approach to forecasting capital and operating expenditure.
Preliminary Revenue Proposal
ElectraNet releases its Preliminary Revenue Proposal (PRP) which will focus on capital and operating expenditure forecasts, and provide an indicative revenue and price path outlook for the 2019-2023 regulatory period.
Consultation on the Preliminary Revenue Proposal
Stakeholders will be invited to provide feedback on the PRP.
ElectraNet’s Revenue Proposal (RP) outlines the program of work (capital and operating expenditure forecasts) and forecast revenue required to maintain and operate safe, reliable and efficient network services. The RP must meet the long-term needs of electricity customers.
The AER publishes an Issues Paper in which it identifies early key issues likely to be relevant to its assessment. This includes a ‘first pass’ assessment indicating its preliminary view on ElectraNet’s RP.
Public Submissions on Revenue Proposal and Issues Paper
The Revenue Proposal and Issues Paper are published for public consultation.
The AER and their Consumer Challenge Panel present the early issues to stakeholders and discuss how they can provide input into the process. ElectraNet is provided the opportunity to give a summary of the RP.
The AER uses a range of evidence to review and assess the RP, including historic cost trends, benchmarking against comparable businesses and expert advice. The Draft Determination (DD) includes the draft total capital and total operating expenditure forecasts, and the draft revenue the AER considers efficient, taking into account stakeholder consultation feedback.
The AER and the Consumer Challenge Panel present to stakeholders to explain the DD.
Public Submissions on DD and Pre-Determination Conference
The DD and Pre-Determination Conference are published for public consultation.
Revised Revenue Proposal
ElectraNet’s Revised Revenue Proposal (RRP) sets out revisions made to the RP to incorporate changes arising from the DD made by the AER and comments from stakeholders.
Public submission on Revised Revenue Proposal
The Revised Revenue Proposal is published for public consultation.
The AER publishes the Final Transmission Determination which contains the maximum allowed revenue (MAR) that ElectraNet may recover from customers through transmission network charges. It also includes the final total capital and operating forecasts the AER considers efficient, taking into account the long term interests of customers.