Annual electricity benchmarking reports released alongside a new consultation paper on capitalisation

The Australian Energy Regulator (AER) today released its annual benchmarking reports for electricity distribution and transmission networks.

These reports analyse the productivity growth and efficiency of distribution network service providers (DNSPs) and transmission network service providers (TNSPs) individually, and as an industry, in the National Electricity Market (NEM) throughout 2020 and since 2006.

The benchmarking reports support the AER's work in regulating electricity networks on behalf of consumers, and are used by industry to benchmark their performance over time and against other businesses and the economy.

Key findings in these latest reports include:

• In 2020, distribution industry productivity increased by 1.2 per cent and transmission industry productivity increased by 1.7 per cent. These productivity improvements are consistent with the trend of increased productivity since 2016. The increases in 2020 are noteworthy against the backdrop of productivity reductions in the utilities sector and the Australian economy. Productivity growth since 2015 has been stronger across distribution and transmission networks than in the utilities sector or the Australian economy.
• Of the 13 DNSPs, 9 became more productive in 2020, primarily due to reductions in operating expenditure.
• Since 2006, there has been some convergence in the productivity levels of DNSPs and from 2012 the New South Wales and Australian Capital Territory DNSPs have been among the most improved in the NEM.
• Of the 5 TNSPs, 3 became more productive in 2020. This was primarily due to improved network reliability, with other contributing factors being reductions in operating expenditure and overhead line capacity.

The AER also released today a consultation paper that commences a process to better understand and account for the impacts of different capitalisation practices (that is, how costs are allocated) on its distribution benchmarking results. This process will examine the impact of differences both between distribution businesses and over time, and will explore potential methods to address material impacts.

We invite submissions to our consultation paper by 4 February 2022.

Submissions should be emailed to [email protected] with the subject line: Attn: Sebastian Roberts, General Manager - Network Expenditure - Submission on the impact of capitalisation on the AER's benchmarking.

Alternatively, written submissions can be sent to:

Sebastian Roberts
General Manager
Network Expenditure
Australian Energy Regulator
GPO Box 520
Melbourne, VIC, 3001

We prefer that all submissions be publicly available to facilitate an informed and transparent consultative process. We will treat submissions as public documents unless otherwise requested. All non-confidential submissions will be placed on the AER's website. For further information regarding the AER's use and disclosure of information provided to it, see the ACCC/AER Information Policy.

We request parties wishing to submit confidential information:

• clearly identify the information that is the subject of the confidentiality claim
• provide a non-confidential version of the submission in a form suitable for publication.

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