Energy consumer advocate, the Public Interest Advocacy Centre, strongly supports the Australian energy rule-maker's decision to reject a request from energy network businesses to change network financing rules to the detriment of consumers.
The Australian Energy Market Commission (the Commission) today rejected Transgrid and ElectraNet's bid to allow them to recover revenue for large capital investments sooner, on the basis it is unnecessary and would create higher up-front costs for consumers.
'This decision is a win for all consumers and a strong stand by the Commission against rent-seeking by electricity network businesses' said Craig Memery, Head of Energy Policy, Public Interest Advocacy Centre.
New transmission projects identified in the Integrated System Plan (ISP) already represent billions of dollars of investment in large energy infrastructure with a guaranteed return for investors that is recouped entirely from consumers. The change proposed by Transgrid and ElectraNet would shift more cost and risk to consumers by making them pay before the projects are even commissioned.
The Commission rejected Transgrid and ElectraNet's claim they need to access cashflows from customers sooner to be able to attract finance for ISP projects.
'If this proposal had been accepted, NSW consumers would see bill increases without any benefits,' said Mr Memery. 'The Commission has rightly found there's nothing stopping transmission businesses from financing large projects now. Australian energy networks continue to be seen as sound investments: if Transgrid or ElectraNet's current shareholders don't want to invest in new projects here, they should stand back and let other investors take the lead.'
'The proposal amounts to accelerated depreciation – a concept the AER has considered and rejected in several determinations previously as not being in the long-term interests of consumers,' said Mr Memery. 'It would be like making households pay rent on a home years before they live there.'
'The energy system is undergoing a rapid transformation that demands new network infrastructure,' said Mr Memery. 'This transformation shouldn't be used as an excuse to lump consumers with the cost of handouts to businesses that don't result in a cleaner, cheaper or more reliable energy system.'
'As people struggle following bushfires, drought, floods and the pandemic, it's more important than ever to ensure people rather than big businesses reap the benefits of the energy transition', said Mr Memery.
