Figure 1 AER proposed classification of NSW distribution services Source: AER Our final F&A decision on service classification is not binding for our determination on the NSW network businesses' regulatory proposals. However, under the NER we may only change our classification approach if unforeseen circumstances arise, justifying a departure from our final F&A position. Control mechanisms Following on from service classifications, our determinations impose controls on direct control service prices and/or their revenues. We may only accept or approve control mechanisms in a distributor's regulatory proposal if they are consistent with our final F&A. In deciding control mechanism forms, we must select one or more from those listed in the NER. These include price schedules, caps on the prices of individual services, weighted average price caps, revenue caps, average revenue caps and hybrid control mechanisms. Our preliminary position on the form of control mechanisms for the NSW network businesses are: standard control services— revenue cap alternative control services— caps on the prices of individual services. For standard control services the NER mandate the basis of the control mechanism must be the prospective CPI–X form or some incentive-based variant. Our final F&A decision on the form of control is binding. We may only vary our decision on control mechanisms in response to unforeseen circumstances. Incentive schemes Incentive schemes encourage network businesses to manage networks in a safe, reliable manner that serves the long term interests of consumers. They provide network businesses with incentives to only incur efficient costs and to meet or exceed service quality targets. Our preliminary position is to apply each of the available incentive schemes to each of the NSW network businesses: Service Target Performance Incentive Scheme Efficiency Benefit Sharing Scheme (EBSS) Capital Expenditure Sharing Scheme (CESS) Demand Management Incentive Scheme (DMIS) Our F&A approach on the application of incentive schemes is not binding on us or the NSW network businesses.
Figure 1 AER proposed classification of NSW distribution services Source: AER Our final F&A decision on service classification is not binding for our determination on the NSW network businesses' regulatory proposals. However, under the NER we may only change our classification approach if unforeseen circumstances arise, justifying a departure from our final F&A position. Control mechanisms Following on from service classifications, our determinations impose controls on direct control service prices and/or their revenues. We may only accept or approve control mechanisms in a distributor's regulatory proposal if they are consistent with our final F&A. In deciding control mechanism forms, we must select one or more from those listed in the NER. These include price schedules, caps on the prices of individual services, weighted average price caps, revenue caps, average revenue caps and hybrid control mechanisms. Our preliminary position on the form of control mechanisms for the NSW network businesses are: standard control services— revenue cap alternative control services— caps on the prices of individual services. For standard control services the NER mandate the basis of the control mechanism must be the prospective CPI–X form or some incentive-based variant. Our final F&A decision on the form of control is binding. We may only vary our decision on control mechanisms in response to unforeseen circumstances. Incentive schemes Incentive schemes encourage network businesses to manage networks in a safe, reliable manner that serves the long term interests of consumers. They provide network businesses with incentives to only incur efficient costs and to meet or exceed service quality targets. Our preliminary position is to apply each of the available incentive schemes to each of the NSW network businesses: Service Target Performance Incentive Scheme Efficiency Benefit Sharing Scheme (EBSS) Capital Expenditure Sharing Scheme (CESS) Demand Management Incentive Scheme (DMIS) Our F&A approach on the application of incentive schemes is not binding on us or the NSW network businesses.