Electricity distribution tariffs

SA Power Networks has a proposal with the Australian Energy Regulator (AER) to minimise year-on-year volatility in electricity distribution charges, which make up about 30% of the retail electricity bill. Over the next two years distribution charges will rise and then fall by similar amounts, but SA Power Networks is proposing a shift that would end this volatility and keep charges more steady year-on-year.

On average, in 2019/20, distribution charges, will rise by $46 for residential customers and $179 for small to medium-sized business customers (20MWh per annum). Distribution charges are then proposed to fall in 2020-21 on average by about $40 for residential customers and $111 for small to medium-sized business customers (20MWh per annum).

The final impact for customer bills in 2019/20 will depend on the other factors influencing retail prices, including energy costs.

The increase in distribution charges in 2019/20 reflects revenue and price-path decisions made by the Regulator in 2015 and includes a catch-up for a shortfall in revenue collected in 2018/19 (due to lower than forecast energy consumption) and finalisation of payments under the Regulator’s reliability incentive scheme for the 2015-20 period. Charges during the 2015-20 period have tracked below inflation, as the chart below shows, with customers paying LESS for distribution in 2019/20 than they did in 2014/15.

The fall in 2020/21, reflects SA Power Networks’ plans for managing the network for the next five-year period (2020- 25), which include a stakeholder-supported proposal for a flatter price path that reduces year-on-year pricing volatility for customers. This outcome is subject to change as the 2020-25 regulatory price-setting process is still underway.