Energy regulator signals cheaper electricity bills for small business

Thursday 30 April, 2015 | By: Darrell Giles | Tags: Energy Regulator, ergon, energex, electricity prices;

The Chamber of Commerce and Industry Queensland (CCIQ) welcomes the move by the Australian Energy Regulator (AER), which will result in cheaper power bills for customers.

The AER today released its preliminary decision on Ergon Energy and Energex revenue proposals for the next five years. It regulates the revenues of the network businesses by setting the annual revenue requirement they may recover from customers.

CCIQ Director of Advocacy Nick Behrens said the revenue determined by the AER affected the distribution component of a customer’s electricity bill. Distribution charges made up about 42 per cent of the electricity bill for small businesses in Queensland.

“The AER has reduced the revenue proposals sought by both Ergon Energy and Energex by 27 per cent and 22.6 per cent respectively,” he said.

“The AER has also reduced the rate of return to apply to Ergon Energy and Energex to 5.85 per cent and 5.8 per cent respectively down from 8.02 per cent (Ergon Energy) and 7.75 per cent (Energex).

“The rate of return refers to the return that the network businesses must pay lenders and investors. Even small changes in the rate of return can render a big impact on revenues and customer’s bills.”

The AER had determined that due to the improved investment environment, the rate of return should be significantly lower than the previous period.

“Small businesses in South East Queensland should see a reduction in their annual electricity bills of about 1.8 per cent or $53,” Mr Behrens said.

“The estimated bill impact for small businesses in regional Queensland in Ergon Energy’s distribution area reflects the network charges of Energex due to the Queensland Government uniform tariff policy, which allows regional customers to access the same cost of energy as customers in South East Queensland.

“Regional customers should expect a reduction of about 1.8 per cent or $53 in 2015-16, followed by reductions of $25 and $69 in other years of the regulatory period.

“While this is a positive step in the right direction, CCIQ believes there is much more to do to relieve the cost impacts of electricity on Queensland small businesses.”

The network distribution businesses will now have the chance to submit a revised proposal to the AER by July 3, 2015. The AER will make its final decision by October 31, 2015.


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