AGL SA Price Path Proposal
On 17 May 2010 AGL SA Pty Ltd (AGL SA) submitted to the Commission a proposal for the price path to apply to SA electricity standing contract prices for the period 1 January 2011 to 30 June 2014.
AGL SA is the declared electricity retailer in South Australia for the purposes of section 36AA of the Electricity Act 1996. A declared electricity retailer must, as a condition of its retail licence, agree to sell electricity to a small customer at the standing contract price and subject to the standing contract terms and conditions.
Commencement of Inquiry
As required by the Electricity Act 1996, the Commission has now commenced an Inquiry under Part 7 of the Essential Services Commission Act 2002 into the appropriate price to be fixed as the electricity standing contract price. Such an inquiry must be conducted prior to making a price determination in respect of electricity standing contract prices.
The proposed timetable for the Inquiry is as follows:
Timetable
| Action | By |
|---|
| Receive AGL SA submission |
17 May 2010 |
| Release Issues Paper & AGL SA Proposal |
25 May 2010 |
| 1st round stakeholder submissions due |
25 June 2010 |
| Release Draft Report & Determination |
End August 2010 |
| 2nd round stakeholder submissions due |
End September 2010 |
| Release Final Report & Determination |
By 30 November 2010 |
| Determination takes effect |
1 January 2011 |
The Commission has prepared an Issues Paper, which identifies the key issues faced by the Commission in its assessment of the AGL SA submission. The Commission invites comment on the AGL SA submission, on the various issues raised in the Issues Paper, and on any other matters that stakeholders consider relevant to this Inquiry. Submissions are sought by 25 June 2010.
Publications
The Commission has received 4 written submissions to the 2010 Electricity Standing Contract Price Path Inquiry - Issues Paper.
Submissions
The Commission has received a letter from AGL SA that outlines its proposed methodology for including costs associated with Residential Energy Efficiency Scheme for the 2010 Electricity Standing Contract Price Inquiry.
Publications
The Commission has released its Draft Inquiry Report and Draft Price Determination on the retail component of regulated electricity prices to apply from 1 January 2010 to 30 June 2014.
Based on the Commission's Draft Price Determination, a typical residential customer on the standing contract consuming 5,000kWh per annum would experience an overall price increase of 7% 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.
A key feature of the Draft Price determination is that it adopts a new price setting methodology, which is intended to provide greater price flexibility and alleviate many of the difficulties in developing 3 ½ year cost forecasts. The Commission's Relative Price Movement methodology involves an examination of retailer costs during 2011, such that a cost reflective price can be set on 1 January 2011. At the commencement of each financial year thereafter, the Commission will adjust the standing contract price in line with movements in market contract prices. These price movements will be made subject to prices sitting within a floor and ceiling that have been established by the Commission.
In making the Draft 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 Commission’s Draft Price Determination proposes a standing contract price to apply from 1 January 2011 which is equivalent to $233.75/MWh, which is approximately 1% lower than that submitted by AGL SA. The Commission has reduced the retailer component of standing contract prices by approximately 2% compared to that proposed by AGL SA (the reduction is 3% if the Commission’s Residential Energy Efficiency Scheme allowance is incorporated into the AGL SA price proposal).
The Commission invites comment from interested parties on this Draft Inquiry Report and Draft Price Determination. Submissions are due by 4 October 2010.
Publications
The Commission has received an additional submission from AGL SA regarding the costs of complying with the requirements of the Small-Scale Renewable Energy Scheme (SRES), commencing 1 January 2011. The initial AGL SA proposal (17 May 2010) did not include an SRES allowance, but AGL has now forecast a significant increase in SRES costs compared to that forecast in May 2010.
The Commission invites responses to this submission by 2 November 2010.
Publications
The Commission has received 6 written submissions in response to the Draft Inquiry Report.
Submissions
The Commission has received a submission from Origin Energy in relation to the AGL SA submission regarding costs of complying with the Small-Scale Renewable Energy Scheme (SRES).
Submissions
The Commission has finalised its Inquiry into the Electricity Standing Contract Prices it should fix to apply from 1 January 2011 to 30 June 2014.
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.
A key feature of the Final Price determination is that it adopts a new price setting methodology, which is intended to provide greater price flexibility and alleviate many of the difficulties in developing 3 ½ year cost forecasts. The Commission's Relative Price Movement methodology involves an examination of retailer costs during 2011, such that a cost reflective price can be set on 1 January 2011. At the commencement of each financial year thereafter, the Commission will adjust the standing contract price in line with movements in market contract prices. These price movements will be made subject to prices sitting within a floor and ceiling that have been established by the Commission.
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.
Publications
