Revised Revenue Proposal submitted

On 13 January 2015, TransGrid submitted our Revised Revenue Proposal 2014/15 - 2017/18 to the Australian Energy Regulator (AER).

As part of determining TransGrid's revenue and expenditure for the next five years, we were given 30 business days to review the AER's Draft Determination on our Revenue Proposal for 2014/15 – 2018/19 and submit a Revised Revenue Proposal to address matters raised by the AER.

Over the past month, we have spoken with a range of large energy users and consumer representatives on our view of the AER's Draft Determination and the impacts on our Revenue Proposal. To ensure we captured as much feedback as possible we held a workshop and hosted our first webinar for key stakeholders. A report on the opinions and feedback received on our Revised Proposal is now available here.

TransGrid proposed a move to peak demand pricing in its Pricing Methodology, in response to strong support from consumers. The AER did not approve the Pricing Methodology in the draft decision. As a direct result of feedback and suggestions in December, we remodelled the way to calculate our peak demand pricing and submitted it to the AER. The strong consumer support, invaluable input and alternate suggestions for this new approach to pricing made this possible.

As well as engaging energy users, we reviewed our proposal to ensure we could maintain a safe and reliable supply of electricity while minimising energy price impacts. The AER introduced some alternative ways of modelling expenditure in the draft decision, which we have reviewed and tested in the Revised Proposal.

Some of the key takeaways from the Revised Proposal are as follows:

  • Inclusion of the demand management innovation allowance step change
  • Reduction in our capital expenditure of $40.5m and operating expenditure of $45m
  • A top down assessment of our capital program that demonstrates its prudence and efficiency
  • Reduction in our cost of equity from 10.5% to 9.75%.

The AER took submissions on our proposal until 6 February 2015. More information on this consultation is available on the AER's website.

The AER's final decision was made in April 2015. The final decision can be accessed here.

Related Documents

TransGrid Revised Revenue Proposal
Appendix A - Assessment of Consumer Engagement Process  
Appendix AA - Pricing Methodology  
Appendix B - Report on Consumer Engagement in 2014
Appendix C - Review of AER Benchmarking Study  
Appendix D - Labour Cost Escalation Forecasts December 2014
Appendix E - AMCL Review of EMCa Report to the AER
Appendix F - Response to EMCa Report
Appendix G - Approach to Low Span Remediation
Appendix H - Opex Forecasting Method
Appendix I - Inflation Adjustment to the Opex Model
Appendix J - Corrections and Updates to the Opex Forecast
Appendix K - Consumer Engagement Step Change
Appendix L - Demand Management Innovation Step Change
Appendix M - Debt Raising Transaction Costs - Updated Report
Appendix N - AER Draft Determination - Debt Raising Costs
Appendix O - Grant Samuel Response to AER Draft Decision
Appendix P - TransGrid Cost of Debt Transition
Appendix Q - Response to the Draft Decision on the Return on Debt Allowance
Appendix R - Analysis of Liquidity of Interest Rate Swaps
Appendix S - Experience in the Interest Rate Swap Market
Appendix T - TransGrid's Debt Management Practice
Appendix W - Depreciation Schedule  
Appendix Y - Addendum to Marsh Report
Appendix Z - Pricing Methodology Update
PUBLIC Appendix U - Development of TransGrid's Debt Management Policy  
PUBLIC Appendix X - Key Risks and Relevant Limits