Background

2024-29 Regulatory proposal and Tariff Structure Statement

Every five years, we prepare a detailed plan—a regulatory proposal—explaining how we will operate, maintain and invest in the electricity network to meet the future needs of all Canberrans. This electricity five-year plan is submitted to the Australian Energy Regulator (the regulator) for review and approval. The regulator’s decision on our current plan for 2019–20 to 2023–24 can be viewed on the AER website here.

In addition to this, Evoenergy is required to submit a Tariff Structure Statement. A Tariff Structure Statement provides customers with information about current network tariffs and how these may change in the future. Australia’s National Electricity Rules require all electricity network businesses to publish a Tariff Structure Statement. Our current Tariff Structure Statement forms the basis of network charges in the 2019–20 to 2023–24 regulatory period.

Our current plan and Tariff Structure Statement will expire on 30 June 2024. Our proposal for how we operate and invest in the electricity network in 2024–29 was submitted to the Australian Energy Regulator (AER) on 31 January 2023.

Figure 1. Regulatory timeframe

Figure 2. Evoenergy energy delivery chain

What is in our five-year plan?

Our five year plan covers many aspects and details of how we propose to operate and invest in the electricity network, and a central element of the plan is our estimate of the lowest sustainable cost of managing the electricity network in the ACT. This estimate needs to take into account expected growth in demand for electricity and electricity network connections in the coming five years, as well as managing the network in a way that ensures a quality, reliable, secure and safe electricity supply.

Safety

What is required to ensure our people, community and networks are safe?

Reliability

What do we need to do to ensure that the electricity supply is reliable?

Customer service

What do consumers want in terms of service levels, response times, and what are their priorities?

Operating efficiently

How do we best operate and maintain a reliable network cost-effectively?

Vulnerable Customers

How do we ensure that our vulnerable customers are considered in our future plans?

Pathway towards net zero

What will need to happen in the regulatory period to continue on the path to net zero greenhouse gas emissions by 2045 and what does this mean for the electricity network?

Alternative electricity generation

What impact does increasing solar power generation and battery storage have on the network and how can these be in incorporated into our operations?

Infrastructure investment

Does our current network meet consumer needs, do parts of it need to be replaced or do we need to expand or increase our capacity?

Pricing structures (including tariff options)

Are existing ACT network tariff fit for the 2024-29 regulatory period?

The Regulator reviews our plan and conducts its own analysis to determine whether the proposed cost of providing electricity distribution services is prudent and efficient. prudent and efficient.

Efficient expenditure results in the lowest cost to consumers over the long term.

The Regulator considers the following factors when making its determination on efficient costs:

Consumer engagement

How we have engaged with our consumers and reflected their preferences in our proposal.

Operating expenditure

How efficiently we operate and maintain the electricity network; taking into account the levels of service, reliability and safety we provide.

Capital costs

How we plan to invest for expansion of the network to service new developments and replacement of assets within the existing network as they reach the end of their useful lives, including costs of funding investment (for shareholders and sourcing debt) and depreciation.

Tariff structure

A tariff is the way that you are charged for your use of the electricity network. This may be determined by how much electricity you use, what time of day you use it, and how much you use at any certain times. Tariffs are designed to reflect the costs associated with your use of the network and encourage you to use electricity at certain times when there is more capacity in the network.

Forecast consumption and demand

How consumers use the network, including the total quantity of electricity transported over the network every year, and peak demand, which is the highest quantity of electricity being transported at a single point in time. Demand is a critical determinant of the level of Evoenergy’s investment in the network.

Framework and Approach

The Framework and Approach is the first step in the regulatory review – it establishes the scope and framework of the regulatory review. During the Framework and Approach process, the regulator decides which services it will regulate (service classification), and how it controls the prices we charge and/or revenue we collect for offering these services (control mechanisms). The Framework and Approach process also reveals the regulator’s initial positions on the broad nature of the regulatory arrangements including incentive schemes, transmission assets and depreciation of regulatory assets among others.

As part of the preparation of the 2024-29 regulatory proposal, Evoenergy submitted a request to the regulator with respect to the Framework and Approach on 31 October 2021 and the AER published its response in the form of a Framework and Approach paper to guide Evoenergy’s 2024–29 regulatory proposal on 31 July 2022.

Tariff Structure Statement

Each regulatory period, distributors submit a tariff structure statement (TSS) to the regulator for approval. The TSS provides customers and the community with clear information about current network tariffs and how these may change in the future.
Evoenergy’s TSS structure will determined by a number of factors including:

the expected impact on customers; and
consumer engagement and understanding.

Evoenergy’s network is facing considerable changes that may have an impact on the way network tariffs are structured in the next regulatory period. These include impacts from solar generation, electric vehicle and residential battery uptake, the introduction of grid-scale batteries to the network and the ACT Government’s target of net zero emissions by 2045.

With the changing landscape of the energy market, we need to consider whether changes to the current tariff structure are required, and if so, what these changes mean for customers.