AER's proposed opex incentive mechanism for ActewAGL

January 2015

Greg Houston prepared an expert report that was submitted to the Australian Energy Regulator (AER) at the end of January in support of ActewAGL Distribution’s revised regulatory proposal for the period commencing on 1 July 2014 to 30 June 2019. Greg’s report assesses the implications of the AER’s draft decision on the Efficiency Benefit Sharing Scheme and the incentives on ActewAGL to efficiently incur operating expenditure.

Greg’s expert report finds that the AER’s draft decision imposes a retrospective change to the regulatory framework that has a material negative financial impact on ActewAGL and undermines the incentive for ActewAGL to efficiently incur operating expenditure. Consequently, Greg’s expert report concludes that the draft decision promotes short term efficiency objectives at the expense of long term efficiency objectives and so does not promote the long term interests of consumers in accordance with the national electricity objective.

Greg’s expert report can be found in Attachment C1 to ActewAGL’s revised regulatory proposal here.

Posted on February 9, 2015 and filed under Reports.