ACCC decision on NSW, ACT electricity transmission revenues caps
The Australian Competition and Consumer Commission today issued its decision on the revenue cap for NSW and ACT electricity transmission services.
The decision sets the maximum revenue that TransGrid and energyAustralia can earn in providing electricity transmission services (the physical infrastructure used to transport high voltage electricity) in NSW and the ACT. The ACCC's decision is in accordance with the principles in the National Electricity Code and NSW's transitional rules.
"This decision is the first made by the ACCC as the economic regulator of electricity transmission in the National Electricity Market," ACCC Chairman, Professor Allan Fels, said today.
"The ACCC has set a revenue path for TransGrid that trends from $329.6 million in 1999/2000 to $393.1 million in 2003/04. The ACCC's decision will result in an initial fall in TransGrid's revenue, from $339 million in 1998/99. However, revenues will subsequently rise in-line with TransGrid's extensive new investment proposals".
This revenue path provides TransGrid with a 13.85 per cent (post tax nominal) return on equity based on an opening asset base of $1.935 billion.
"The ACCC's decision balances the lower customer prices with the need to provide TransGrid with a reasonable return but one which is equivalent to other regulated industries".
The ACCC's revenue cap is lower than the revenue path requested by TransGrid but higher than that proposed in the ACCC's earlier draft decision. The reasons for this difference is that the ACCC has: revised upwards its assessment of TransGrid's asset values but have not adopted the easement values proposed by TransGrid; included the majority, but not all, of the projects in TransGrid's capital expenditure program; revised its estimates for depreciation and construction costs; and revised the cost of capital parameters in-line with recent market trends but not to the level requested by TransGrid.
Regarding, EnergyAustralia's transmission assets, the ACCC adopted an opening asset base of $345 million and has used a return on equity that is consistent with TransGrid's.
Copies of the ACCC's decision can be obtained on the ACCC web site: http://www.accc.gov.au or from Ms Maxine Helmling on telephone (02) 6243 1246.
The Australian Competition and Consumer Commission today issued its decision on the revenue cap for NSW and ACT electricity transmission services.
The decision sets the maximum revenue that TransGrid and energyAustralia can earn in providing electricity transmission services (the physical infrastructure used to transport high voltage electricity) in NSW and the ACT. The ACCC's decision is in accordance with the principles in the National Electricity Code and NSW's transitional rules.
"This decision is the first made by the ACCC as the economic regulator of electricity transmission in the National Electricity Market," ACCC Chairman, Professor Allan Fels, said today.
"The ACCC has set a revenue path for TransGrid that trends from $329.6 million in 1999/2000 to $393.1 million in 2003/04. The ACCC's decision will result in an initial fall in TransGrid's revenue, from $339 million in 1998/99. However, revenues will subsequently rise in-line with TransGrid's extensive new investment proposals".
This revenue path provides TransGrid with a 13.85 per cent (post tax nominal) return on equity based on an opening asset base of $1.935 billion.
"The ACCC's decision balances the lower customer prices with the need to provide TransGrid with a reasonable return but one which is equivalent to other regulated industries".
The ACCC's revenue cap is lower than the revenue path requested by TransGrid but higher than that proposed in the ACCC's earlier draft decision. The reasons for this difference is that the ACCC has: revised upwards its assessment of TransGrid's asset values but have not adopted the easement values proposed by TransGrid; included the majority, but not all, of the projects in TransGrid's capital expenditure program; revised its estimates for depreciation and construction costs; and revised the cost of capital parameters in-line with recent market trends but not to the level requested by TransGrid.
Regarding, EnergyAustralia's transmission assets, the ACCC adopted an opening asset base of $345 million and has used a return on equity that is consistent with TransGrid's.
Copies of the ACCC's decision can be obtained on the ACCC web site: http://www.accc.gov.au or from Ms Maxine Helmling on telephone (02) 6243 1246.