A message from our Reset Advisory Council

Andrew Nance

Electricity is complicated. Transport is a useful analogy for Territorians to help break down some of this complexity.

Power and Water does not make electricity, rather they deliver it. They are in the electricity transport business.

They are responsible for the electrical ‘roads’ that transport electricity from generators to customers. This includes the electrical ‘highways’ from the large generators to the substations where the transport routes divide into the electrical ‘streets’ that connect directly to customers. Since not that many of us store electricity at home we tend to rely on a continuous delivery service. Power and Water respond as fast as they can when there is an interruption to electricity delivery.

How do we want our electricity delivered to us for the rest of this decade? That is what is up for grabs as Power and Water develop their revenue proposal for the 2024-29 regulatory period. This represents a five year window where Territorians will rely on electricity as much, or more, than they do now.

To put a sense of scale to what is up for grabs, in the current five-year window, Power and Water has been approved to collect over $800 million dollars from customers via their electricity retailers. This was considered enough to pay for the operation, maintenance, refurbishment and expansion of the shared network.

But is this the right amount for 2024-29? Are there opportunities to be more efficient? Is there a case for spending more on certain things? By consulting with its customers, Power and Water will refine its proposal for 2024-29.

The role of the RAC is to keep a voice of the customer at the table as Power and Water consider the feedback from you – their customers.

The People’s Panels and other sources of feedback have emphasised the following:

  • Customer Service is really important – customers want to be able to talk to the business about important issues (new connections, move-ins, move-outs, metering and more) and clearly want to know more information when electricity deliveries are interrupted.
  • The three regulated networks have some really unique attributes that mean that customers have quite different electricity delivery experiences and therefore have different priorities for the future.
  • Customers have embraced the idea of ‘home brew’ electricity and want to share it more. They want Power and Water to ensure the electricity ‘streets’ are wide enough and in good enough condition for them to share with their neighbours. They are interested in sharing some local electricity storage as well.
  • Customers also expect Power and Water to think about the long-term and invest in maintaining the electricity roads, streets, substations and so on to keep electricity deliveries as reliable as they are now – or even better for some customers – until 2030 and beyond. Customers understand that most of the infrastructure was built over a short period of time and it won’t last forever – but they don’t want to have to pay to replace it all over a similarly short time frame.

Customers have been consistent and clear that affordability for households and businesses are a top priority. So, it is important to also consider that investments in the future capability and capacity of the electricity delivery network will mean borrowing more money.

The existing ‘regulatory asset base’ (the amount still ‘under finance’) is over a billion dollars. It is becoming clear that the current period of low interest rates is over. This means it will cost more to finance the electricity network in the next five years compared to the previous five years. However, it is not yet clear just how much interest rates will go up. In an era of higher interest rates, some important trade-offs will be needed to keep revenues at the same levels as now.

Feedback on this document is a very important way of finding the right balance between the risk of underinvesting in the electricity delivery network and the risk of ‘gold plating’ and spending more than we really need. We look forward to hearing your feedback and we will do our best to represent that to Power and Water as we work towards a Draft proposal to the Australian Energy Regulator in January 2023.

Andrew Nance