ALARM AT FEDERAL REGULATOR’S DRAFT ELECTRICTY DETERMINATION

Marshall calls for rethink to avert devastating rural impact

 

IN a submission lodged last Friday, Northern Tablelands MP Adam Marshall has urged the Australian Energy Regulator (AER) to rethink its draft electricity distribution determination, which he claims is flawed and will have detrimental impacts on communities throughout rural and regional NSW.

 

In its draft determination, released late last year, the AER has proposed retrospectively reducing Essential Energy’s revenue allowances by $6.5 billion or 27% over the 5 year period to 2019 based on reduced cost of capital, reduced operating expenditure and more than a 60% real reduction in the capital investment program, compared to the previous five years.

 

“The AER draft determination foreshadows significant cuts to Essential Energy’s revenue, operational and capital allowances, which will cripple the company and cause many detrimental impacts throughout the Northern Tablelands,” Mr Marshall wrote in his submission.

 

“The draft determination is flawed as it does not adequately address the current reform program, does not account for impacts on network reliability, uses inappropriate comparators and doesn’t recognise the impact on regional apprenticeships.

 

“In short, it’s a shallow economic rationalist assessment of the electricity networks across rural NSW that if implemented will jeopardise jobs, but also the safety and reliability of electricity supply in the bush.”

 

Mr Marshall said rural and regional families and businesses depended on Essential Energy for safe, reliable and affordable energy supply.

 

“Essential Energy is also a significant employer in the Northern Tablelands, employing approximately 158 people, which means its staff members and their families play an important economic role in our region, particularly in our smaller communities,” he said.

 

“It is because of these crucial roles that together with the community we fought so hard to ensure Essential Energy remains in 100% public ownership.”

 

Mr Marshall said that the AER has failed to take into account efficiencies already made by Essential Energy over the last two years.

 

“Essential Energy contends it has already delivered $2.8 billion of capital and operating savings, with a total of $5.4 billion to be removed from capital and operating budgets through to June 2016,” he said.

 

“Additionally, the double digit annual electricity increases from July 2009 to July 2012 have been contained at less than CPI for both July 2013 and July 2014.”

 

Mr Marshall requested the AER to into account the impact on network reliability in reaching its final determination. Importantly, he said, emergency response benchmarks must remain at their current high standards.

 

“Essential Energy services 95 per cent of the NSW landmass but only 24 per cent of NSW customers, so it has to contend with many issues other networks don’t, such as a huge vegetation clearing and management program which ensures reliable supply while minimising risk of bushfires,” he said.

 

“I wholeheartedly agree with the employees of Essential Energy that reliability and safety should not be threatened in rural and regional NSW. By determining a punitive cost cutting regime and forcing the removal of staff and closure of small depots, the AER determination would have a deleterious effect on call out and critical repair response times.”

 

Mr Marshall is also concerned about the significant impact the draft determination, if implemented in its current form, would have on the ability to train and employ apprentices in regional NSW.

 

“Essential Energy has a proud history and reputation in training and in many rural and regional NSW communities, including the Northern Tablelands, it is the only company that has taken on apprentices and undertakes training,” he said.

 

Mr Marshall is also asking members of the community to make their views known to the AER before the submission deadline of Friday, 13 February 2015.

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