TransGrid submitted its transitional five year business plan and revenue proposal for the 2014/15 year to the Australian Energy Regulator (AER) at the end of January 2014.
The transitional proposal covers just the 2014-15 financial year, the first year of the five year regulatory period and sets out the indicative forecast expenditure and revenue for the total five-year period. The requirements to deliver TransGrid's operating plans and capital investment for the remaining four years of the regulatory period are set out in a more substantive proposal which was submitted to the AER at the end May 2014.
The transitional proposal is a "placeholder" revenue proposal which will be set aside when the AER makes its determination on TransGrid's full revenue proposal. To find out more about TransGrid's full revenue proposal and five year business plan click here.
On 28 March 2014, the AER handed down its determination on TransGrid's Transitional Revenue Proposal. To find out more visit the AER website. If you are interested in finding out what this means for NSW and the ACT's electricity transmission services we've explained it here.
Overview of Transitional Proposal
TransGrid has pursued efficiencies, implemented continuous improvement programs, managed costs and deferred capital expenditure where prudent during the current regulatory control period. These achievements benefit consumers in the transitional proposal, in which TransGrid has contained forecast revenue growth to no higher than CPI for the upcoming period.
The energy market is evolving and TransGrid is adapting its operations to effectively and efficiently meet this changing environment. We have deferred over $600 million of capital expenditure in response to changes in electricity demand patterns. Consumers will directly benefit from these decisions in this proposal, with forecast revenue over the next five years $230 million lower due to the deferrals. This means lower transmission costs passed on to the bill payers of NSW and the ACT.
TransGrid has connected renewable generation, pursued low-cost methods of improving the capacity of flow paths, and improved project initiation and delivery processes to be able to respond more rapidly when short notice needs arise. As the demand forecast remains subdued, TransGrid has responded and this proposal features significantly less capital expenditure for network augmentations (build options) than previous proposals.
What we looked at based on your feedback
TransGrid has and will continue to undertake an extensive consumer engagement program for our revenue application to ensure the full revenue proposal takes into consideration bill payers' perspectives and priorities. This includes holding a number of forums with residential and small business customers, talking with our directly connected customers, starting conversations on our new engagement website – Have Your Say - and working with consumer representatives and large businesses on specific aspects of our proposal.
We understand that consumers are concerned about the cost of electricity so we have made a real effort to take on board feedback we have received whilst consulting on our business plans for the future, including:
- The cost of electricity and the need to keep prices at a minimum
- A new community engagement model for capital projects
- Our pricing model and methodology
- The reliability standards of our network, how important this is to customers and what people are willing to pay
- Ways to improve our planning processes and involve consumers and businesses in our decision making process
- Responding to uncertainty in demand forecasts and ways we can review and incorporate changing priorities
- Initiatives to actively reduce peak demand and reduce or defer network investment
- Ways to manage people going 'off grid' and the impact this might have on our infrastructure.
Transitional Revenue Reset Proposal
Transitional Revenue Reset Proposal - Appendix
AEMO Endorsement of NCIPAP