Queensland Determination on Electricity Distribution Network tariffs

01 Jun 2005Archived News Climate Change Matters

In January and February 2004, two severe storms swept through Queensland causing great damage to the electricity distribution network and extended power outages for consumers. As a result, the Queensland government appointed an independent panel to review the Queensland electricity distribution system.

 

In January and February 2004, two severe storms swept through Queensland causing great damage to the electricity distribution network and extended power outages for consumers. As a result, the Queensland government appointed an independent panel to review the Queensland electricity distribution system. Two major findings from the review included:

  • "There had been under investment in both the Energex and Ergon networks for an extended period of time;
  • Significant new investment and operating expenditure was required for both networks" (1).

The Queensland Competition Authority recently released its Final Determination on the Regulation of Electricity Distribution for the period 1 July 2005 to 30 June 2010. The authority has set a smoothed aggregated revenue requirement from distribution customers for Energex in 2005-06 of $628.5 million (increase of 11.9%) and for Ergon $684.3 million (increase of 30.1%).

Franchise customers are protected from any sharp increase in price. In the case of contestable customers there is no such protection, however the authority expects "the price impacts for contestable customers to remain reasonable" (1).

In the medium term, the authority is concerned about a few customers who are either charged above or below the cost of providing the network service (prices are not cost reflective). The customers currently being charged below the cost of providing their service will be advised of the proposed pathway by 30 October 2005, and will be informed of any price increases to make the prices cost reflective by the end of 2010.

Another issue being considered by the authority and the networks are structural changes in the network tariffs. An example of this is moving from kW tariffs to kVA tariffs.

(1) Final determination on the Regulation of Electricity Distribution by Queensland Competition Authority.

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