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NSW power networks must cut tariffs


Source: The Australian Financial Review, 16th April 2014

NSW households and small businesses will have their electricity bills cut from July 1 after the national energy regulator took the red pen to tariffs proposed by the state’s electricity distributors.

Under a decision to be announced on Wednesday, the Australian Energy Regulator will force the four distributors in NSW and the ACT to slash their tariffs to ensure savings they have made because of lower electricity demand are passed on to customers.

The annual bill for the average NSW household will drop by $38, while small business customers such as shop owners will get a $60 saving.

The distributors, Ausgrid, Endeavour Energy, Essential Energy and ActewAGL, had proposed charges for 2014-15 ranging from a $2 cut to a $37 increase. AER chairman Andrew Reeves said the distributors had overestimated the investment needed in networks and mostly under-spent between 2009 and 2014 as demand unexpectedly declined.

“The AER has required the ¬businesses pass on these cost savings to end users,” he said. Mr Reeves said the lower interest rate environment and changes in the rules assessing cost of capital also played into the decision.

The ruling is the latest example of the tougher approach being taken by the regulator on proposed spending ¬programs by energy companies in the regulated part of the power market.