The Commission conducted an Inquiry into the retailer component of regulated electricity prices to apply from 1 January 2005 to 31 December 2007. The retailer component, charged by AGL SA, represents just over half of a customer’s electricity bill.
In March 2004 the SA Government released a report from the Independent Pricing and Regulatory Tribunal on a review of the methodology used by the Essential Services Commission of SA in examining electricity standing contract prices for SA small consumers.
The report made a number of recommendations which the Government adopted, including changes to the Electricity Act 1996. Specifically, legislative amendments were introduced to move from an annual (or more frequent) price setting process to a price path approach covering multiple years, with the process to be initiated by a proposal from the electricity retail entity and providing the Commission with a period of at least six months to review the entity's proposal.
Prior to the finalisation of legislative amendments (in May 2004), the Minister for Energy referred to the Commission an Inquiry under Part 7 of the Essential Services Commission Act 2002. The Inquiry was intended to enable the Commission to proceed with the necessary studies and consultation to allow a price path to be implemented for a three year period.
The Conduct of the Inquiry requires the Commission to publish an "Issues Paper" within one month of receipt of the terms of reference of the Inquiry. Consequently, the Commission has released the Issues Paper on the Retail Electricity Price Path.
Submissions should be provided by 30 July 2004.
Publications
The Commission received the following submissions on the Issues Paper.
Submissions
In August 2004 AGL SA submitted its proposal and supporting justification for the Retail Electricity Prices for Standing Contract Customers for the period January 2005 to June 2008.
Publications
In September 2004 the Commission released a Discussion Paper, together with studies from the Electricity Supply Industry Planning Council and the Allen Consulting Group. The studies assessed the long run marginal cost of electricity supply to AGL SA's standing contract customers, assessed AGL SA's existing contracts for the review period and modelled the prudent costs of purchasing the unhedged proportion of the small customer load for which AGL SA had legal responsibility.
The Discussion Paper and associated studies were intended to provide an overview of and basis for consultation on the AGL SA proposal, to discuss matters raised through submissions to the Issues Paper, to provide results of various components of analysis the Commission had undertaken and to provide further opportunity for discussion regarding the establishment and implementation of a medium term electricity price path.
Publications
The Commission received the following submissions on the Discussion Paper.
Submissions
In November 2004 the Commission released its draft report on the Inquiry into the AGL SA price path proposal, along with a draft Price Determination. Comments were sought on the draft Determination by mid-December to allow for its finalisation and commencement on 1 January 2005. Comments on the draft Inquiry Report were also sought, with a due date of 11 February 2005.
Publications
The Commission received the following submissions on the Draft Price Determination.
Submissions
In December 2004 the Commission issued the final Price Determination, fixing the electricity standing contract prices which may be charged to small electricity customers by AGL SA. The Price Determination set a price path for all standing contract prices, having effect for a period of three years from 1 January 2005.
Publications
In January 2005 AGL SA sought a review of the final Price Determination under section 31 of the Essential Services Commission Act 2002 in respect of:
- those parts of the Price Determination relating to wholesale energy costs, retail operating costs and retail margin (which AGL SA felt were too low or otherwise inadequate),
- the failure of the Commission to follow statutory requirements and objectives; andÂ
- those parts of the Price Determination that were beyond power.
The Commission had a six week period within which to finalise the Review. In accordance with the requirements of the Act, the Commission provided the Minister (the Treasurer in this instance) with a copy of the application and invited him to join as a party to the review and make a submission on those matters raised by AGL SA. The Treasurer's submission was received in February 2005.
The Commission gave extensive consideration to the matters raised by AGL in its Review Application and in the submission from the Treasurer, Hon K Foley. The Commission decided, pursuant to section 31(8) of the ESC Act, to confirm the Standing Contract Price Determination of December 2004.
Publications
