Ruling highlights need to get review process right

A Federal Court ruling highlighted the need for the Council of Australian Governments (COAG) to finalise its examination of the review process for setting returns for electricity networks and to establish a system that ends the opportunity to exploit the process, the energy industry said today.

All NSW and potentially electricity consumers in other states will pay more for electricity as a result of the decision, which is worth billions of dollars for the buyers of the 51 per cent stakes in former NSW state-owned monopoly network businesses, Ausgrid and Endeavour Energy.

Australian Energy Council Chief Executive, Matthew Warren, said a review process was necessary to correct regulatory error in setting returns for monopoly businesses like electricity networks.

“Consumers are best served by efficient, reliable networks that deliver this service at the lowest cost,” Mr Warren said.

“Setting regulated returns for monopoly businesses is inherently difficult. But the process of appealing these decisions has become part of the revenue determining process, rather than as intended, as a measure to correct genuine errors.

“It’s time for COAG to finalise a new review process.”

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Media contact             Carl Kitchen                0401 691 342