Submission to Forecasting productivity growth for electricity distributors draft decision

PIAC strongly supports the Australian Energy Regulator (AER) reviewing its current practice of assuming zero productivity growth in distribution determinations. We do not consider this practice to be in the long-term interests of consumers. Consumers expect businesses to find cost savings wherever possible and cannot accept that neither profit-maximising principles nor regulation requires them to find operating efficiencies.

This has informed a united response from consumer advocates, including PIAC, Energy Users Association of Australia, Major Energy Users and the AER’s Consumer Challenge Panel (CCP). In PIAC’s view, the AER should include a productivity forecast of at least 1.5% per annum in future distribution determinations.

PIAC supports implementing the outcome of this review to the AER’s April 2019 determinations. To delay implementation past these decisions would result in inefficiently high opex allowances for some DNSPs.