Determination
Energex Limited ACN 078 849 055
Pass through application for
Queensland solar bonus scheme 2011-12
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
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January 2013
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
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© Commonwealth of Australia 2013
This work is copyright. Apart from any use permitted by the Copyright Act 1968, no part may be
reproduced without permission of the Australian Competition and Consumer Commission. Requests
and inquiries concerning reproduction and rights should be addressed to the Director Publishing,
Australian Competition and Consumer Commission, GPO Box 3131, Canberra ACT 2601.
AER reference: 47276/D12/181637
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
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Contents
Contents ...................................................................................................................................... ii
Shortened forms......................................................................................................................... iii
Overview .................................................................................................................................... iv
1
Determination ...................................................................................................................1
2
Energex’s pass through application ..................................................................................2
3
Assessment approach .......................................................................................................4
4
Reasons for determination ................................................................................................ 7
Appendix A ................................................................................................................................ 14
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
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Shortened forms
Shortened form
Full title
AER
Australian Energy Regulator
ACT
Australian Competition Tribunal
CPI
consumer price index
DNSP
distribution network service provider
Energex
Energex Limited ACN 078 849 055
FiT
feed-in tariff
NEL
National Electricity Law
NER
National Electricity Rules
QCA
Queensland Competition Authority
RIN
regulatory information notice
SBS
Queensland Solar Bonus Scheme
WACC
weighted average cost of capital
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Overview
On 19 October 2012, Energex Limited ACN 078 849 055 (Energex) submitted a pass through
application to the Australian Energy Regulator (AER) in respect of the feed-in tariff (FiT) payments
incurred under the Queensland Solar Bonus Scheme (SBS). In its application, Energex proposed a
positive pass through amount in 2011–12 of $78 560 900.
The pass through regime allows distribution network service providers (DNSPs) to pass through
certain costs to customers, representing the difference between the SBS scheme costs estimated in
the determination and the actual costs incurred, subject to certain efficiency standards and other
matters assessed by the AER. Under its current determination, Energex is entitled to submit a
feed-in tariff pass through application to the AER for assessment. The AER must assess the
application against the requirements outlined in clause 6.6.1 of the National Electricity Rules (NER)
and the current AER determination currently applying to Energex.1 In particular, the AER must
determine if a pass through event occurred, and if so, determine an approved pass through
amount.
The AER considers that Energex’s pass through application establishes that a pass through event
occurred. The AER notes that Energex is obliged under the Electricity Act 1994 (Qld) to incur
direct FiT payments. The AER is satisfied that the direct FiT payments incurred by Energex in
2011–12 were paid through the operation of the Electricity Act 1994 (Qld) and materially increased
Energex’s costs in providing direct control services in the regulatory control period.
The AER is required by the NER to determine the amount of the pass through amount that should
be passed through in each remaining year of the regulatory control period. Based upon its
assessment of the relevant factors listed in clause 6.6.1(j) of the NER, the AER concludes the
approved pass through amount for Energex is $78 560 900 ($Dec 2013).
1
AER, Final Decision: Queensland distribution determination 2010–11 to 2014–15, May 2010.
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
iv
Therefore, the AER has determined that $78 560 900 ($Dec 2013) is the approved pass through
amount. This means that in 2013-14 Energex will increase its approved revenue by $78 560 900
(an increase of six percent from the determination). For Energex customers the increase in
revenue can be recovered from customers through higher network charges.
The increased feed-in costs in Queensland reflect the fact that consumer participation in the SBS
(through the installation of photo-voltaic systems, or solar panels) has been significantly greater
than was forecast. These forecasts were made by Energex when the current determination was
decided. At that time, the SBS was a relatively new initiative and there was little historical data
upon which Energex could rely to make their forecasts. In fact, consumer participation in the SBS
has been substantial. Participation in the scheme also increased rapidly following the
announcement of the Queensland Government on 26 June 2012 to close the existing scheme to
new applications from midnight on 9 July 2012.
The Queensland Competition Authority, in a recent review of the SBS, estimated that at the peak of
its impact in 2015-16, the costs of the SBS will add $120 to an average Tariff 11 (residential retail
tariff) customers’ annual electricity bill. 2
Queensland solar bonus scheme
The SBS is a Queensland Government initiative which came into effect on 1 July 2008. It provides
eligible customers with credit for the surplus electricity, generated by solar photovoltaic (PV) panel
systems, which is exported into the Queensland electricity grid. It is designed to make solar power
more affordable for Queenslanders, stimulate the solar power industry and encourage energy
efficiency.3
2
Queensland Competition Authority, Draft Report- Estimating a Fair and Reasonable Solar Feed-in Tariff for
Queensland, November 2012, pp. 53-54. The final report is due to the Minister on 22 March 2013.
3
Queensland Department of Energy and Water Supply Fact Sheet, ‘Changes to the Solar Bonus Scheme’, updated on
27 June 2012.
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The SBS is available to small residential and business customers who consume less than 100MWh
per year, with grid-connected PV panel systems not exceeding 5kW capacity. Customers can
recover the costs of installing a PV panel system via a feed-in tariff paid for by the surplus
electricity their PV panel system exports into the grid.
At the end of each billing period, the customer's meter is read to determine the total amounts of
surplus electricity exported to and imported from, the grid. The DNSP provides this data to the
customer’s retailer, which then calculates the amount of the 'solar bonus' by multiplying the number
of kWh exported by the rate of the feed-in tariff (which is set by the Queensland Government). The
solar bonus amount is deducted from the customer's consumption charge for imported electricity. If
the value of the customer’s exports exceeds their consumption their retail account is credited.
Section 44A of the Electricity Industry Act 1994 (Qld) imposes a condition on DNSPs to allow
credit for electricity produced by small PV generators at the prescribed amount. Accordingly, under
the SBS the retailer recovers the cost of crediting customer accounts from the DNSPs. The DNSP
then passes the cost onto customers through its network pricing.
Recent changes to the SBS
Customers who lodged an application to participate in the SBS on or before 9 July 2012 receive a
payment of 44c/kWh for surplus electricity fed into the grid.
On 26 June 2012, the Queensland Energy Minister, Mark McArdle, announced changes to the
SBS.4 These changes included:

The scheme closing to new applications effective from midnight on 9 July 2012

A replacement FiT of 8c/kWh applying from 10 July 2012 and ending on 1 July 2014,
pending a further review of the scheme
4
Minister for Energy and Water Supply, the Honourable Mark McArdle, Media Statement on ‘Changes to
Queensland Solar Bonus Scheme Announced’, June 26, 2012.
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
Existing Solar Bonus Scheme participants continuing to receive the current 44c/kWh
FiT as long as they continue to meet eligibility criteria, and

The Queensland Competition Authority (QCA) conducting a review and making
recommendations by early 2013 on a subsidy free ‘fair and reasonable’ solar FiT for
Queensland.
The QCA review is currently underway. An issues paper was released in August 2012. The QCA’s
draft report was released on 27 November 2012 and the final report is due to the Minister on 22
March 2013.
Structure of determination
This determination is structured as follows:

Chapter 1 – sets out the AER’s determination on Energex’s pass through application

Chapter 2 – sets out Energex’s pass through application

Chapter 3 – sets out the AER’s assessment approach

Chapter 4 – sets out the AER’s reason for the determination
AER determination| Energex pass through application for Queensland solar bonus scheme 2011-12
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1
Determination
The AER considers that Energex’s pass through application establishes that a pass through event
occurred. The AER is satisfied that the direct FiT payments incurred by Energex in 2011–12 were
paid through the operation of the Electricity Act 1994 (Qld) and materially increase Energex’s costs
in providing direct control services in the regulatory control period.
The AER is required by the NER to determine the amount of the pass through amount that should
be passed through in each remaining year of the regulatory control period. Based upon its
assessment of the relevant factors listed in clause 6.6.1(j) of the NER, the AER concludes the
approved pass through amount for Energex is $78 560 900 ($Dec 2013). This means that in
2013-14 Energex will increase its approved revenue by $78 560 900 (an increase of six percent
from the determination). For Energex customers the increase in revenue can be recovered from
customers through higher network charges.
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2
Energex’s pass through application
On 19 October 2012, the AER received a pass through application from Energex relating to
payments for the SBS. The application seeks the AER’s approval to pass through a positive pass
through amount of $78 560 900 for 2011-12.
Energex’s application indicates it incurred $73 948 550 of FiT payments in 2011-12, based upon
154 695 886kWh in metered output. Energex’s application notes that the forecast amount of 2011–
12 FiT payments included in forecast operating expenditure was $6 174 279 ($nominal).5 Energex
states:
...the difference of $67, 774, 271 is the result of an additional 154, 695, 886kWh in metered output
compared to forecast, reflecting the significantly higher than expected take up of the SBS since
inception.6
Energex notes that the difference between the forecast and actual FiT payments is $67 774 271.
Energex submits that when this figure is adjusted for inflation and the time value of money the
result is $78 560 900. Energex applied to have this amount treated as a positive pass through
amount under clause 6.6.1 of the NER.
Energex proposes that the proposed positive pass through amount be incorporated into network
charges for the 2013–14 regulatory year by way of increased charges for its customers.
In its application Energex notes that the value of payments will be subject to verification through the
audit of Energex’s 2011–12 regulatory information notice (RIN). Energex’s pass through application
also advises that, following the Queensland Government announcing in June 2012 changes to the
SBS effective from 9 July 2012, it received approximately 76 000 applications prior to the
deadline. The 44c/kWh FiT payment will apply to these applications and is expected to have a
5
AER’s Final Decision: Queensland distribution determination 2010–11 to 2014–15, May 2010, p. 151.
6
Energex Limited, Pass through application –Queensland Solar Bonus Scheme, 18 October 2012, p. 1.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
further impact on FiT payments until all eligible systems are installed or applications lapse on 30
June 2013. It appears likely, therefore, that the FiT scheme will result in a further significant
positive pass through in the next regulatory year.
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3
Assessment approach
The AER is required to consider a pass through application in accordance with clause 6.6.1 of the
NER.
3.1
Relevant regulatory requirements
The AER received Energex’s application on 19 October 2012 and, therefore, is applying the rules
that applied on this date. 7
The clauses of the NER which the AER had regard to when making its determination are outlined
in appendix A. In particular, the relevant factors that the AER must take into account when making
a pass through determination are set out in clause 6.6.1(j) of the NER:
Relevant factors
(j) In making a determination under paragraph (d) or (g) in respect of a Distribution Network Service
Provider, the AER must take into account:
(1)
the matters and proposals set out in any statement given to the AER by the provider
under paragraph (c) or (f); and
(2)
in the case of a positive change event, the increase in costs in the provision of direct
control services that, as a result of the positive change event, the provider has incurred and is
likely to incur until:
(i) unless subparagraph (ii) applies – the end of the regulatory control period in which
the positive change event occurred; or
(ii) if the distribution determination for the regulatory control period following that in which
the positive change event occurred does not make any allowance for the recovery of that
7
The AER notes that version 51 of the NER applied during the period in which Energex’s application was
received.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
increase in costs – the end of the regulatory control period following that in which the
positive change event occurred; and
(2A)
in the case of a negative change event, the costs in the provision of direct control
services that, as a result of the negative change event, the provider has saved and is likely to
save until:
(i)
unless subparagraph(ii) applies – the end of the regulatory control period in which the
negative change event occurred; or
(ii) if the distribution determination for the regulatory control period following that in which
the negative change event occurred does not make any allowance for the pass through of
those cost savings to Distribution Network Users – the end of the regulatory control period
following that in which the negative change event occurred; and
(3)
in the case of a positive change event, the efficiency of the provider's decisions and
actions in relation to the risk of the positive change event, including whether the provider has
failed to take any action that could reasonably be taken to reduce the magnitude of the eligible
pass through amount in respect of that positive change event and whether the provider has
taken or omitted to take any action where such action or omission has increased the magnitude
of the amount in respect of that positive change event; and
(4)
the time cost of money based on the weighted average cost of capital for the provider
for the regulatory control period in which the pass through event occurred; and
(5)
the need to ensure that the provider only recovers any actual or likely increment in
costs under this paragraph (j) to the extent that such increment is solely as a consequence of
a pass through event; and
(6)
in the case of a tax change event, any change in the way another tax is calculated, or
the removal or imposition of another tax, which, in the AER's opinion, is complementary to the
tax change event concerned; and
(7)
whether the costs of the pass through event have already been factored into the
calculation of the provider's annual revenue requirement for the regulatory control period in
which the pass through event occurred or will be factored into the calculation of the provider's
annual revenue requirement for a subsequent regulatory control period; and
7A
the extent to which the costs that the provider has incurred and is likely to incur are
the subject of a previous determination made by the AER under this clause 6.6.1; and
(8)
any other factors the AER considers relevant.
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3.2
Assessment approach
When assessing Energex’s positive pass through application, the AER must first determine whether
a ‘positive change event’ occurred. This assessment is done with reference to the NER and the
current AER determination applicable to the applicant Energex (which defines the pass through
events which Energex can utilise during the regulatory control period). The AER, as part of this
process, also determines the materiality of the proposed past through amount. Under chapter 10 of
the NER a positive change event for a DNSP is defined as:
....a pass through event that materially increases the costs of providing direct control services.
Once the AER determines that a positive change event occurred it must then determine:

the approved pass through amount; and

(the amount of that approved pass through amount that should be passed through to
Distribution Network Users in each regulatory year during the regulatory control period 8
The AER makes this determination taking into account those factors set out in clause 6.6.1(j) of
the NER (quoted above).
3.3
What the AER considered in making this determination
The AER’s determination has been made in accordance with clause 6.6.1 of the NER.
In forming its determination, the AER has:
8

considered the application and supporting information it received from Energex

undertaken its own analysis to verify the information provided by Energex.
NER, clause 6.6.1(d).
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4
Reasons for determination
The AER is satisfied that Energex’s pass through application establishes that a pass through event
occurred. The AER considers the direct FiT payments incurred by Energex in 2011–12 materially
increase Energex’s costs in providing direct control services in the regulatory control period, as
required under clause 6.6.1(j)(2) of the NER.
4.1
Occurrence of a pass through event
Chapter 15 of the AER’s Final Decision: Queensland distribution determination 2010–11 to 2014–
15 deals with pass through arrangements. In this determination a ‘Feed–in Tariff event’ is regarded
as a nominated pass through event. A ‘Feed–in Tariff event’ is defined as:9
‘a change in the total amount of direct feed–in tariff payments paid by a Qld DNSP in respect of the
Qld feed–in tariff scheme. For the purposes of this definition, the change in the amount of the direct
tariff payments paid by the DNSP must be calculated as the difference between:
a)
the amount of direct tariff payments paid by the DNSP in each regulatory year of the next
regulatory control period, derived from the metered output of generators subject to the scheme and the
applicable feed–in tariff rate applying to the metered output; and
b)
the amount of scheme direct tariff payments which were forecast for the purposes of and
included in the Qld distribution determination for each regulatory year of the regulatory control period.
Relevant direct tariff payments under this pass through mechanism are those paid through the
operation of the Electricity Act 1994 (Qld), and any amendments to this act.’
The reference to ’the Qld feed–in tariff scheme’ in the definition above is a reference to the SBS.
9
AER, Final Decision: Queensland distribution determination 2010–11 to 2014–15, May 2010, p. 311.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
4.1.1
Direct feed-in tariff payments
The AER is satisfied that the direct payments incurred by Energex in 2011-12, as set out in its
pass through application, arise out of the operation of the SBS. The SBS is established under the
Electricity Act 1994 (Qld). This legislation imposes a requirement on DNSPs to allow credit for
electricity produced by small PV generators. 10
4.1.2
Materiality
Chapter 10 of the NER defines a positive change event for a distribution network service provider
as:
a pass through event that materially increases the costs of providing direct control services.
In the AER’s Final Decision: Queensland distribution determination 2010–11 to 2014–15, the AER
stated that a pass through event will have a material impact if the costs associated with the event
exceed one per cent of the annual smoothed revenue requirement.
However, in its draft determination the AER stated that a lower materiality threshold may be
appropriate for specific nominated pass through events, such as the feed-in tariff pass through
event, equivalent to the reasonable costs of assessing the pass through application. 11 This position
was not varied in the final determination.
Consistent with the final determination the AER applied a materiality threshold for a specific
nominated event that reflects the administrative costs of assessing the application. The positive
pass through amount of $78 560 900 million proposed by Energex clearly meets the
administration cost threshold for specific nominated pass through events. The AER notes that this
10
11
s. 44A of the Electricity Act 1994 (Qld).
AER’s Draft Queensland distribution determination decision 2010–11 to 2014–15, November 2009, pp. 337, 33940.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
amount is also considerably greater than the one per cent materiality threshold applying to general
nominated pass through events. As set out in table 4.1 below the proposed pass through amount
equates to approximately six per cent of Energex’s annual revenue requirement for 2011-12 as
determined by the AER and amended by the Australian Competition Tribunal (ACT).12
Table 4.1: FiT pass through amounts as a proportion of Energex’s annual revenue
requirement for 2011-12
Energex’s proposed FiT
Annual revenue
Proposed pass through
pass through amount
requirement for 2011–12
amount as % of Energex’s
(as amended by the ACT)
annual revenue
requirement
Energex
$78 560 900
$1 311.1 million
6.0%
Source: AER analysis
The AER considers the direct FiT payments incurred by Energex under the SBS increased the
costs of providing direct control services. This is because the activities which Energex undertakes
in order to comply with its obligations under the SBS relate to direct control services as defined in
s. 2B of the National Electricity Law (NEL). For example, Energex undertakes network operation,
monitoring and metering activities as part of the SBS.
4.1.3
Timing of Energex’s application
Clause 6.6.1 of the NER requires DNSPs to submit a pass through application to the AER within
90 business days of the positive change event occurring, or alternatively within 90 business days
of becoming aware of the occurrence of a negative change event.
The AER considers that the feed-in tariff event occurred at the end of the 2011–12 regulatory year
i.e. 30 June 2012. This is the date when accounting journals are closed off, and an over or under
12
See orders made by the Australian Competition Tribunal on 19 May 2011 to vary the AER Final Decision:
Queensland Distribution Determination 2010-11 to 2014-15 as it relates to Energex, p. 6.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
recovery for the direct feed in payment was realised. Accordingly, the AER is satisfied that Energex
submitted its pass through application within 90 business days of the positive change event
occurring.
4.2
Assessment of the pass through amount
In considering Energex’s pass through application, the AER took into account those factors set out
in clause 6.6.1(j) of the NER. Each of these factors is discussed below.
4.2.1
Matters and proposals set out by Energex
The AER reviewed Energex’s application and supporting information. The AER made its
determination based on the matters and proposals set out by Energex.
If the AER does not make its determination within 60 business days of receiving Energex’s pass
through application—i.e. by no later than 17 January 2013—the AER is taken to have determined
that the pass through amount sought by the applicant is approved.13
4.2.2
The increase in costs incurred by Energex
The AER substantiated the actual SBS payment values used to calculate the positive pass through
amount sought by Energex by checking the proposed pass through amount against the FiT
payments reported in Energex’s 2011–12 RIN.
4.2.3
Actions to reduce the magnitude of the pass through amount
The SBS is a Queensland Government initiative. It is facilitated through provisions contained in the
Electricity Act 1994 (Qld) including a section which imposes a requirement on DNSPs to allow
13
NER, clause 6.6.1 (e)
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
credit for electricity produced by small PV generators. 14 The AER considers that the legislative
obligations imposed upon Energex mean it is unable to reduce the magnitude of the pass through
amount. On this basis, the AER considers that Energex has no ability to influence the feed-in tariff
event from occurring or reducing the magnitude of the pass through amount.
4.2.4
Time cost of money
Clause 6.6.1(j)(4) of the NER requires the AER to take into account the time cost of money based
on the weighted average cost of capital (WACC) for the provider. In calculating the pass through
amount, the AER has made an allowance for the time cost of money.
Time cost of money has been based upon the WACC for Energex, as set out in the AER’s Final
Decision: Queensland distribution determination 2010–11 to 2014–15. This is a nominal vanilla
WACC of 9.72%.15 The AER applied WACC for 1.5 years as revenue will be recouped, on
average, halfway through the year when the adjusted prices apply (i.e. 31 December 2013).
4.2.5
Recovery of costs solely a consequence of the pass through event
The AER considers that Energex’s proposed pass through amount only includes incremental costs
that are solely attributed to the direct FiT payments it has incurred. Energex’s direct FiT payments
have been verified through its RIN for 2011–12.
4.2.6
Whether the costs have already been factored into Energex’s annual revenue
requirement
In the AER’s Final Decision: Queensland distribution determination 2010–11 to 2014–15, the AER
determined that Energex’s forecast SBS operating expenditure for 2011-12 was $5.9 million
14
s. 44A of the Electricity Act 1994 (Qld)
15
AER, Final Decision: Queensland distribution determination 2010–11 to 2014–15, May 2010, p. 267.
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($2009–10).16 This amount relates to the forecast feed-in tariffs for the SBS and does not include
administration costs.
Energex’s application identified the difference between the actual direct FiT payments it incurred in
2011–12 and those forecast in the final determination as reflecting the significantly higher than
expected take up of the SBS since its inception.
The AER agrees that the difference between the forecast and actual direct FiT payments was not
provided for in the AER’s Final Decision: Queensland distribution determination 2010–11 to 2014–
15. The AER in its Draft Queensland distribution determination 2010–11 to 2014–15 considered it
appropriate for Queensland DNSPs to recover or return to users any difference between forecast
and actual direct tariff payments through a nominated pass through event. This was on the basis
that the Queensland DNSPs may have insufficient historical data to reliably forecast the payments
that they will be required to make under the SBS, thereby making the cost impact difficult to
forecast.17
4.2.7
Extent the costs are subject of a previous determination made by the AER
under clause 6.6.1 of the NER
The AER considers that Energex’s proposed pass through amount is not part of a previous pass
through determination by the AER under clause 6.6.1 of the NER. In this regard, the AER notes
that Energex made a pass through application associated with the occurrence of a feed-in tariff
event in September 2011. This application was for a positive pass through amount in 2010–2011
regulatory year. In December 2011, the AER approved a positive pass through amount of $17 092
898 to be incorporated into distribution charges for 2012-13.
16
AER, Final Decision: Queensland distribution determination 2010–11 to 2014–15, May 2010, p. 153.
17
AER’s Draft Queensland distribution determination decision 2010–11 to 2014–15, November 2009, p.
339.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
4.2.8
Any other factors the AER considers relevant
There are no other factors the AER considers relevant in making its determination on the pass
through amount.
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
Appendix A
Excerpt from version 51 of the NER – clause 6.6.1:
6.6.1 Cost pass through
(a1) Any of the following is a pass through event for a distribution determination:
(1) a regulatory change event;
(2) a service standard event;
(3) a tax change event;
(4) a retailer insolvency event; and
(5) any other event specified in a distribution determination as a pass through event for the
determination.
(a) If a positive change event occurs, a Distribution Network Service Provider may seek the approval
of the AER to pass through to Distribution Network Users a positive pass through amount.
(b) If a negative change event occurs, the AER may require the Distribution Network Service Provider
to pass through to Distribution Network Users a negative pass through amount as determined by the
AER under paragraph (g).
Positive pass through
(c) To seek the approval of the AER to pass through a positive pass through amount, a Distribution
Network Service Provider must submit to the AER, within 90 business days of the relevant positive
change event occurring, a written statement which specifies:
(1) the details of the positive change event; and
(2) the date on which the positive change event occurred; and
(3) the eligible pass through amount in respect of that positive change event; and
(4) the positive pass through amount the provider proposes in relation to the positive change
event; and
(5) the amount of the positive pass through amount that the provider proposes should be
passed through to Distribution Network Users in the regulatory year in which, and each
regulatory year after that in which, the positive change event occurred;
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(6) evidence:
(i) of the actual and likely increase in costs referred to in subparagraph (3); and
(ii) that such costs occur solely as a consequence of the positive change event; and
(iii) in relation to a retailer insolvency event, of :
(A)
the amount to which the Distribution Network Service Provider is entitled
under any relevant credit support; and
(B)
the maximum amount of credit support (if any) that the Distribution Network
Service Provider was entitled to request the retailer to provide under the credit support
rules; and
(C)
any amount that the Distribution Network Service Provider is likely to
receive on a winding-up of the retailer; and
(7) such other information as may be required under any relevant regulatory information
instrument.
(d) If the AER determines that a positive change event has occurred in respect of a statement under
paragraph (c), the AER must determine:
(1)
the approved pass through amount; and
(2)
the amount of that approved pass through amount that should be passed through to
Distribution Network Users in the regulatory year in which, and each regulatory year after that
in which, the positive change event occurred,
taking into account the matters referred to in paragraph (j).
(e) If the AER does not make the determinations referred to in paragraph (d) within 60 business days
from the date it receives the Distribution Network Service Provider's statement and accompanying
evidence under paragraph (c), then, on the expiry of that period, the AER is taken to have determined
that:
(1)
the positive pass through amount as proposed in the provider's statement under
paragraph (c) is the approved pass through amount in respect of that positive change event;
and
(2)
the amount of that positive pass through amount that the provider proposes in its
statement under paragraph(c) should be passed through to Distribution Network Users in the
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
regulatory year in which, and each regulatory year after that in which, the positive change
event occurred, is the amount that should be so passed through in each such regulatory year.
Negative pass through
(f) A Distribution Network Service Provider must submit to the AER, within 90 business days of
becoming aware of the occurrence of a negative change event for the provider, a written statement
which specifies:
(1) the details of the negative change event concerned; and
(2) the date the negative change event occurred; and
(3) the costs in the provision of direct control services that the provider has saved and is likely
to save as a result of the negative change event until:
(i) unless subparagraph (ii) applies – the end of the regulatory control period in which the
negative change event occurred; or
(ii) if the distribution determination for the regulatory control period following that in which
the negative change event occurred does not make any allowance for the pass through of
those cost savings - the end of the regulatory control period following that in which the
negative change event occurred; and
(4) the aggregate amount of those saved costs that the provider proposes should be passed
through to Distribution Network Users; and
(5) the amount of the costs referred to in subparagraph (4) the provider proposes should be
passed through to Distribution Network Users in the regulatory year in which, and each
regulatory year after that in which, the negative change event occurred; and
(6) such other information as may be required under any relevant regulatory information
instrument.
(g) If a negative change event occurs (whether or not the occurrence of that negative change event is
notified by the provider to the AER under paragraph (f)) and the AER determines to impose a
requirement on the provider in relation to that negative change event as described in paragraph (b),
the AER must determine:
(1) the required pass through amount; and
(2) taking into account the matters referred to in paragraph (j):
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
(i) how much of that required pass through amount should be passed through to
Distribution Network Users (the "negative pass through amount"); and
(ii) the amount of that negative pass through amount that should be passed through to
Distribution Network Users in the regulatory year in which, and each regulatory year after
that in which, the negative change event occurred.
(h) A Distribution Network Service Provider must provide the AER with such information as the AER
requires for the purpose of making a determination under paragraph (g) within the time specified by
the AER in a notice provided to the provider by the AER for that purpose.
Consultation
(i)
Before making a determination under paragraph (d) or (g), the AER may consult with the
relevant Distribution Network Service Provider and such other persons as the AER considers
appropriate, on any matters arising out of the relevant pass through event the AER considers
appropriate.
Relevant factors
(j) In making a determination under paragraph (d) or (g) in respect of a Distribution Network Service
Provider, the AER must take into account:
the matters and proposals set out in any statement given to the AER by the provider
(1)
under paragraph (c) or (f); and
in the case of a positive change event, the increase in costs in the provision of direct
(2)
control services that, as a result of the positive change event, the provider has incurred and is
likely to incur until:
(i) unless subparagraph (ii) applies – the end of the regulatory control period in which
the positive change event occurred; or
(ii) if the distribution determination for the regulatory control period following that in which
the positive change event occurred does not make any allowance for the recovery of that
increase in costs – the end of the regulatory control period following that in which the
positive change event occurred; and
(2A)
in the case of a negative change event, the costs in the provision of direct control
services that, as a result of the negative change event, the provider has saved and is likely to
save until:
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
(iii) unless subparagraph(ii) applies – the end of the regulatory control period in which the
negative change event occurred; or
(iv) if the distribution determination for the regulatory control period following that in which
the negative change event occurred does not make any allowance for the pass through of
those cost savings to Distribution Network Users – the end of the regulatory control period
following that in which the negative change event occurred; and
(3)
in the case of a positive change event, the efficiency of the provider's decisions and
actions in relation to the risk of the positive change event, including whether the provider has
failed to take any action that could reasonably be taken to reduce the magnitude of the eligible
pass through amount in respect of that positive change event and whether the provider has
taken or omitted to take any action where such action or omission has increased the magnitude
of the amount in respect of that positive change event; and
(4)
the time cost of money based on the weighted average cost of capital for the provider
for the regulatory control period in which the pass through event occurred; and
(5)
the need to ensure that the provider only recovers any actual or likely increment in
costs under this paragraph (j) to the extent that such increment is solely as a consequence of
a pass through event; and
(6)
in the case of a tax change event, any change in the way another tax is calculated, or
the removal or imposition of another tax, which, in the AER's opinion, is complementary to the
tax change event concerned; and
(7)
whether the costs of the pass through event have already been factored into the
calculation of the provider's annual revenue requirement for the regulatory control period in
which the pass through event occurred or will be factored into the calculation of the provider's
annual revenue requirement for a subsequent regulatory control period; and
7A
the extent to which the costs that the provider has incurred and is likely to incur are
the subject of a previous determination made by the AER under this clause 6.6.1; and
(8)
any other factors the AER considers relevant.
Extension of time limits
(k) The AER must, by written notice to a Distribution Network Service Provider, extend a time limit
fixed in clause 6.6.1(c) or clause 6.6.1(f) if the AER is satisfied that the difficulty of assessing or
quantifying the effect of the relevant pass through event justifies the extension.
retailer insolvency event
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
(l) For the purposes of calculating the eligible pass through amount in relation to a positive change
event which is a retailer insolvency event, the increase in costs is the retailer insolvency costs
excluding:
(i) any amount recovered or recoverable from a retailer or a guarantor of a retailer under any
relevant credit support; and
(ii) amounts that the Distribution Network Service Provider is likely to receive on a winding-up
of the retailer; and
(iii) any costs that are recoverable under a RoLR cost recovery scheme distributor payment
determination.
(m) The amount the AER determines should be passed through to Distribution Network Users in
respect of a retailer insolvency event must be taken to be a cost that can be passed through and not a
revenue impact of the event.
Excerpt from version 51 of the NER – chapter 10:
approved pass through amount
In respect of a positive change event for a Transmission Network Service Provider:
(a) the amount which the AER determines should be passed through to Transmission Network
Users under clause 6A.7.3(d)(2); or
(b) the amount which the AER is taken to have determined under clause 6A.7.3(e)(1),
as the case may be.
In respect of a positive change event for a Distribution Network Service Provider:
(a) the amount the AER determines should be passed through to Distribution Network Users
under clause 6.6.1(d)(2); or
(b) the amount the AER is taken to have determined under clause 6.6.1(e)(1),
as the case may be.
eligible pass through amount
In respect of a positive change event for a Transmission Network Service Provider, the
increase in costs in the provision of prescribed transmission services that, as a result of that
positive change event, the Transmission Network Service Provider has incurred and is likely to
incur (as opposed to the revenue impact of that event) until:
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
(a) unless paragraph(b) applies – the end of the regulatory control period in which the positive
change event occurred; or
(b) if the transmission determination for the regulatory control period following that in which the
positive change event occurred does not make any allowance for the recovery of that increase
in costs (whether or not in the forecast operating expenditure or forecast capital expenditure
accepted or substituted by the AER for that regulatory control period) – the end of the
regulatory control period following that in which the positive change event occurred.
In respect of a positive change event for a Distribution Network Service Provider, the increase
in costs in the provision of direct control services that, as a result of that positive change event,
the Distribution Network Service Provider has incurred and is likely to incur (as opposed to the
revenue impact of that event) until:
(a) unless paragraph(b) applies – the end of the regulatory control period in which the positive
change event occurred; or
(b) if the distribution determination for the regulatory control period following that in which the
positive change event occurred does not make any allowance for the recovery of that increase
in costs (whether or not in the forecast operating expenditure or forecast capital expenditure
accepted or substituted by the AER for that regulatory control period) – the end of the
regulatory control period following that in which the positive change event occurred.
pass through event
For a distribution determination - the events specified in clause 6.6.1(a1)
For a transmission determination – the events specified in clause 6A.7.3(a1).
positive change event
(a) For a Transmission Network Service Provider, a pass through event that materially
increases the costs of providing prescribed transmission services, but does not include a
contingent project or an associated trigger event.
(b) For a Distribution Network Service Provider, a pass through event that materially increases
the costs of providing direct control services.
(c) For a Distribution Network Service Provider, a retailer insolvency event.
positive pass through amount
For a Transmission Network Service Provider, an amount (not exceeding the eligible pass
through amount) proposed by the provider under clause 6A.7.3(c).
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12
For a, an amount (not exceeding the eligible pass through amount) proposed by the provider
under clause 6.6.1(c).
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AER determination | Energex pass through application for Queensland solar bonus scheme 2011-12