Network power prices set to fall under CitiPower's new proposal
Electricity network prices for homes and businesses in Melbourne's CBD and inner suburbs will decrease by 6.5% in 2021 while investment in the safety and flexibility of the power network will be sustained under a new draft proposal released by distribution business, CitiPower, today.
The draft proposal for the 2021-2025 regulatory period has been released for consultation, and offers to reduce annual network charges by $25 to $339 for residential customers and by $94 to $1,376 for business customers in 2021. These prices are proposed to remain flat in real terms over the next four years, between 2022 and 2025.
As network prices decrease, CitiPower is seeking $795 million in capital expenditure including customer connections expenditure of $157 million. This is a 7 per cent decrease from the previous regulatory period and will sustain the safety and reliability of the network while supporting an additional 20,000 customer connections, augmentation needed to enable solar PV and increased inspection and maintenance programs.
CitiPower Chief Executive Officer Tim Rourke said the five-year proposal balanced the need to keep prices affordable with the network investment essential for accommodating customers' energy choices.
"Under this proposal it will cost less for our customers to get a better and safer service and to do what they want with electricity," Mr Rourke said.
"In particular, we want to help customers installing solar PV to get the most out of both their investment and the Victorian Government's subsidy."
The major individual projects proposed for the 2021-2025 regulatory period include:
· Replacement work of $194 million and in particular, $51 million on pole and line replacements for community safety and infrastructure reliability;
· Upgrades and augmentation works of $246 million including $15 million on network improvements to accommodate more solar and battery storage installations;
· $14 million to continue repairing old underground pits that provide access to our electrical assets in Melbourne's CBD;
· More than $44 million to modernise our network in the Brunswick and Port Melbourne areas; and
· Supporting major infrastructure projects including Metro Rail, the West Gate tunnel and the Victoria Market redevelopment.
Mr Rourke said these investments were necessary to ensure network capacity did not curtail customers using solar PV.
"We are planning a dedicated program to enable greater solar PV connections and more renewable energy exports by installing smarter technology and assets to manage voltage flows on the network," he said.
Consultation with more than 5,000 stakeholders during the past two years had defined demand for a smart and flexible network with solar PV installations expected to more than double by 2025.
"We have listened to what our customers want. Our proposal supports their decisions and continues to deliver the performance they expect from a smart network," Mr Rourke said.
"Importantly, it also passes on savings achieved through cost efficiencies over the past five years."
CitiPower is seeking operating expenditure of $471 million for 2021-2025, the same amount as it received in the previous regulatory period of 2016-2020.
Annual productivity benchmarking by the AER has assessed CitiPower to be the second lowest cost network in Australia and among the most efficient in the country.
CitiPower is also Australia's most reliable network, with power available for more than 99.99 per cent of the year, equating to customers, on average, being without power for about 20 minutes a year.
"Distribution charges make up approximately a quarter of average annual residential electricity costs and have declined over the past decade," Mr Rourke said.
"It means for about $1 per day, our customers get the benefit of our 2,000 people who build, operate and maintain the network of poles, wires and infrastructure to bring electricity to homes and businesses."
Other charges identified by the Australian Energy Market Commission's 2018 Residential Electricity Price Trends Review (December 2018) and which make up the price stack to customers include: transmission, metering, wholesale electricity generation, environmental levies and retailer charges.
As a regulated business, CitiPower's proposed investments, pricing plans and rate of return are approved by the AER every five years and this determines the revenue we are able to recover from our customers.
CitiPower is now seeking customer feedback on its 2021-2025 Draft Proposal. This feedback will inform the final proposal due to the AER in July this year.
Customers have until 30 April 2019 to submit feedback to the draft proposal. It can be found at talkingelectricity.com.au
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Background – CitiPower
CitiPower distributes electricity to around 329,000 customers – or more than 600,000 Victorians - across Melbourne's CBD and inner suburbs. Electricity is distributed in the region via a network comprising over 7,500 kilometres of wires supported by more than 58,000 poles and associated infrastructure.
The network supports 2,000 commercial and industrial business, 51,000 small businesses and 25 per cent of Victoria's GDP, as well as major sporting facilities like the Melbourne Cricket Ground.
Teams based in two depots across our network are focused on staying on top of things to deliver reliable, safe and affordable electricity to households and businesses by operating, managing and maintaining all network assets and metering services.
AER benchmarking rates CitiPower as Australia's most reliable network, and one of the most efficient and highly utilised networks in the National Electricity Market.
