Network Tariff Reviews

by Energy Action | Jul 04, 2014
From 1 July 2014, electricity consumers in New South Wales, Queensland, South Australia, Australian Capital Territory and Tasmania will experience changes to their network tariffs.

Network charges cover the cost of transporting electricity from generators to consumers and account for approximately half of a typical electricity bill. Network tariffs are reviewed annually by the Australian Energy Regulator (AER) who oversee the network businesses and monitor compliance within the National Electricity Market (NEM) Network costs are proportional to your site’s consumption and demand.

Reducing these aspects of your electricity usage can help in reducing the increase in costs. Increases to network costs will vary between tariffs and depending on your sites electricity usage behaviour. Specific tariff pricing will be finalised in mid-June. Your new network costs will be determined by applying your site specific consumption and demand values to the newly approved regulated tariff assigned to your site.

As always, there are winners and losers depending on where your site is located. New South Wales and Australian Capital Territory sites have benefited by entering into their new regulated 5 year period, which is being treated as a transitional period with the majority of adjustments being loosely attributed to CPI. Queensland and South Australian sites are still within their 5 year regulation period and continue to be plagued by the previously cited justifications for their increases outlined further on.

Representative tariff increase percentages can be found in the table below. We have included the actual range of increases of the Customers of Energy Action.

 State 

Network

2014 Average
Tariff Uplift %

State Average Increase

Lowest % increase
/decrease 

Highest % increase
/decrease

Lowest $ change p.a. (difference) per NMI

Highest $
change p.a.
(difference)
per NMI

ACT

 ActewAGL 

 9.52

9.52

3.53%

11.19%

$504

$16,934

TAS

 Aurora

 1.97

1.97

1.42%

2.59%

$181

$2,291

NSW

 Ausgrid

 -4.44

-2.77

-11.76%

2.5%

-$44,875

$18,702

 Endeavour

 -1.26

-13.85%

2.46%

-$13,686

$5,132

 Essential

 -2.61

-4.18%

2.41%

-$97,244

$2,586

QLD

 Energex

 12

10.49

3.42%

19.26%

$109

$55,559

 Ergon

 10.54

5.32%

17.20%

$1,202

$30,575

SA

 SA Power

 10.44

10.44

-2.99%

17.70%

$258

$59,231

Average across NEM

 4.56%

 

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Why are network prices increasing?

Network revenue determinations are made on a 5 year cycle with changes to network tariffs occurring on an annual basis. Both New South Wales and the Australian Capital Territory have now entered the 1st year of their new regulated period, where this year being treated as transitional. For the remaining states, the AER continues to cite several factors which have driven network investment higher, including:
• More rigorous licensing conditions;
• Increased obligations on network security, safety and reliability;
• Load growth and rising peak demand;
• Number of new connections; and
• Ageing assets requiring replacement.

What are my options?
Network costs are a pass through charge and are non-contestable, meaning they cannot be negotiated as part of your contract. Although the costs are non-contestable, you may be eligible to move to a more favourable network tariff which reduces your costs. Energy Action routinely runs network tariff optimisation tests for our Contract Management & Energy Reporting subscribers, powered by Activ8, to determine the most cost effective network tariff.

Energy Action recently identified $1.35 million of potential savings related to network tariff charges for Victorian sites for their January 2014 review and will be conducting this review for other states during July.

Energy Action urges Contract Management & Energy Reporting subscribers to submit their July bill (issued in August) to Energy Action to utilise their bill validation services. Eligible subscribers can also expect to receive an email detailing the approximate network costs for the upcoming financial year once the new tariff structures have been finalised. To find out more about the benefits associated with a Contract Management & Energy Reporting subscription, contact us today.