QLD Electricity distribution determination 2015–2020
Meeting with consumers
7 November 2013

TOPICS
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Welcome
Purpose of the meeting
Overview of the AER
QLD reset process
QLD framework and approach (F&A)
Going forward
2

PURPOSE OF CONSUMER MEETINGS
We can directly engage with consumers and other interested parties
You can ask questions and provide your views about the energy regulation process
3

OVERVIEW OF THE AER
Wholesale gas
& electricity markets
Transmission networks & pipelines
Distribution
Networks for gas/electricity
Retail
& other distribution
We monitor wholesale markets and enforce rules
We regulate revenues of transmission businesses
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We regulate revenues of distribution businesses
We will regulate non-price retail activities

NATIONAL ELECTRICITY OBJECTIVE
“…to promote efficient investment in, and use of, electricity services for the long term interests of consumers of electricity with respect to:
 price, quality, reliability and security of supply and
 the safety, reliability and security of the national electricity system.”
- National Electricity Law
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OUR GOALS
Promoting efficient investment and operation of energy networks
Build consumer confidence in energy markets
Promote competitive and efficient energy markets
Strengthen stakeholder engagement in energy markets and regulatory processes
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WHY ARE CONSUMERS IMPORTANT?
AER
Businesses Consumers
7

QLD RESET PROCESS
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We are responsible for regulating the revenues Energex and Ergon
Energy may earn.
We conduct revenue resets every five years
We are commencing the QLD reset process for 2015–2020
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WHAT’S DIFFERENT THIS TIME
2012 Rule changes
• Improve the AER’s ability to determine network prices so consumers don’t pay more than necessary for the services they require
Better
Regulation
Program
• Updating and improving the AER’s processes under the new Rules
• Seven new guidelines e.g. consumer engagement, expenditure incentives
End of transitional arrangements
• Transitional arrangements applied to the classification of services, control mechanism, incentive schemes.
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QUEENSLAND MARKET ISSUES
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Retail price deregulation?
◦ Removal of energy retail price controls
Lower cost of capital
◦ The cost of funds used for financing a business
Reduced reliability standards?
Smart metering rollout?
QLD government 30-year plan
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TIMELINES
• Preliminary positions F&A
December 2013
30 April 2014
1 July 2015
• F&A published
31 October 2014
June 2015
• Businesses submit regulatory proposals
January/February
2015
• Submissions on regulatory proposals close
April 2015
• AER publishes preliminary determination
• Revised regulatory proposals submitted
• Submissions on revised regulatory proposals close
31 October 2015
• AER publishes final determination
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QLD F&A | WHAT IS IT?
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The F&A considers:
◦ Services we will regulate
( classification )
◦ How we will determine prices for regulated services ( control mechanism )
◦ Application of incentive schemes
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QLD F&A | WHY IS IT IMPORTANT?
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Provides an opportunity for you to have a say in:
◦ which services we should regulate
◦ how much control we have over determining the prices for distribution services
◦ incentive schemes that will apply to the businesses
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QLD F&A | GOING FORWARD
Meeting 1 (today)
• Capture your key issues to consider in our discussion paper
Meeting 2 (week beginning 20 January 2014)
• Discuss issues raised in our preliminary positions paper, prior to the deadline for written submissions
Meeting 3 (week beginning 17 March 2014)
• Discuss how we are considering submissions received and the likely direction of the final F&A
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FURTHER CONSULTATION
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What do you want to know?
How can we assist?
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Contact:
Moston Neck moston.neck@aer.gov.au
07 3835 4669
Robyn Lowien robyn.lowien@aer.gov.au
07 3835 4659
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Form of Regulation
No
Regulation
Direct
Control
Control
Setting
Methodology
Negotiate/
Arbitrate
Alternative
Control
Standard
Control
Process to determine whether and how to regulate services
Form of Price
Control
Form of Price
Control
Not prescribed Revenue
Cap
Price
Cap 17
Hybrid