United Energy notes the Australian Energy Regulator’s (AER) final determination on its 2016-20 regulatory proposal.
The AER’s final determination will see a 14% increase in total allowable revenue compared to its draft decision.
Despite increases in the cost of distribution network services, customers will be better off as a result of reduced smart metering costs and are already benefiting from a price cut in 2016.
United Energy’s customers will pay approximately $33 less for total electricity distribution network charges at the end of the current regulatory period (2020) than they paid in 2015.
United Energy Chief Executive Officer, Tony Narvaez said that while he was pleased the AER had agreed with the case put forward for additional revenue in some areas, he was disappointed by certain aspects of the final determination.
“The final determination falls short of allowing adequate expenditure to deal with the issue of ageing assets on our network, which increase the risk of equipment failure and may lead to a less reliable service.
“Our proposal set out a prudent investment plan to maintain a network to match the needs and expectations of our community. We remain concerned that the cuts may compromise our ability to manage the issue of ageing infrastructure over the remainder of the regulatory period,” he said.
Consistent with its preliminary determination, the AER has applied a figure of 0.4 to the valuation of taxation credits (gamma) in preference to United Energy’s proposal of 0.25. In doing so, the AER has rejected the Australian Competition Tribunal’s (ACT) recent decision on the matter.
United Energy will work through the detail of the AER’s final determination to decide whether it intends to lodge an appeal to the ACT.