Yet another legal challenge puts NSW power price decision on hold

By Mozo ·

The latest energy pricing decision in NSW and ACT faces yet another legal challenge, which could take several months to resolve and lead to further delay in power privatisation, reported the SMH.

On Thursday, the Australian Energy Regulator (AER) applied to the Federal Court for a judicial review of the Australian Competition Tribunal’s decision to set aside the state’s energy distribution network revenue determinations.

“The AER’s aim is to set network revenues in the long term interests of consumers. After careful consideration, we have decided to appeal against the Tribunal’s decisions,” AER Chair Paula Conboy said.

“We have asked the Full Court to consider whether the grounds of review were properly established by the network businesses and whether these were correctly applied by the Tribunal.”

In February, the Tribunal overturned the regulator’s decision to slash the costs charged by electricity and gas networks in February, stating the AER was mistaken in its calculations and asking it to review its decision.

This debate on energy pricing goes back to April 2015, when the energy regulator had said that electricity network operators in NSW had overestimated their requisite expenditure, and had then imposed cuts of up to 30 per cent against the costs that network companies can charge for supplying power.

These cuts could have potentially resulted in reductions of up to $300 annually to household electricity bills.

The regulator’s decision to impose price cuts was challenged by energy companies like Ausgrid, Essential Energy and Endeavour Energy, which said the AER had miscalculated their operating costs. The network operators said that the price cut would push them to reduce spending, which would then hurt power reliability and result in large reductions to their workforces.

The New South Wales government is planning to sell Ausgrid, along with a controlling stake in Endeavour Energy. The extended time taken to finalise the power price decision could delay the conclusion of the sale.

Ms Conboy also said that the AER will continue to consult with stakeholders about the remaking of its original decisions, as required under the Tribunal’s findings, in order to maximise certainty and stability while the judicial review is underway. This includes how prices should be set from 1 July 2016 and until new decisions are made.

While the decision on price cuts remains under scrutiny, consumers in NSW can still slash their electricity bills by switching to a cheaper energy plan. In fact, according to Mozo’s free online electricity comparison tool, a 4-person household in Sydney could save up to $224 a year by switching to the cheapest energy plan.

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