14 Dec 2010 Electricity
The Commission has today released its Final Price Determination in respect of the standing contract prices which AGL South Australia Pty Ltd (AGL SA) will be allowed to charge its South Australian electricity standing contract customers over the next three and a half years (1 January 2011 to 30 June 2014).
The standing contract is the retail electricity contract that AGL SA must offer to all South Australian small customers (customers consuming less that 160 MWh per annum). Less than 30% of all small electricity customers now use the standing contract as the majority of customers have elected to switch to a market contract.
Based on the Commission's Final Price Determination, a typical residential customer on the standing contract consuming 5,000kWh per annum would experience an overall price increase of 12% on 1 January 2011. These figures are inclusive of network charges as established by the Australian Energy Regulator for the period July 2010 to June 2015. Network charges represent about 45% of the annual residential electricity bill.
In making the Final Price Determination, the Commission has reviewed various key cost components of electricity retail services, namely wholesale energy costs, retail operating costs and the retail margin. This review was undertaken with reference to a proposed price path put forward by AGL SA in May 2010, which was released for public consultation. Further, the Commission has had regard to advice from independent experts on each of the cost forecasts.
The Final Price Determination also adopts a new price setting methodology for adjustment of prices during the price path period, in order to provide price flexibility and alleviate many of the difficulties in developing 3 ½ year cost forecasts. At the commencement of each financial year during the period, the Commission will adjust the standing contract price in accordance with movements in market contract prices. These price movements will be made subject to prices sitting within a floor and ceiling established by the Commission.
2010 Electricity Standing Contract Price Path Inquiry