Figure6.8 Ausgrid total capex (including overheads)—historical and forecast for period Source: Historical: IPART Regulatory Accounts (prior to 2010–11) and AER Annual RINs (2010–11 to 2013–14) 2014–2019 period: Ausgrid's Reset RIN, Table 2.1.1 - Standard control services capex). A key driver of capex from 2005 was the NSW licence conditions around design standards. These were removed in July 2014. On 1 August 2005, the NSW Minister for Energy & Utilities introduced the New Licence Condition for NSW DNSPs requiring certain reliability and network design and planning standards to be met. These changes increased the capex requirements of the NSW DNSPs. As the 2004–2009 regulatory determination had already been made, the NSW DNSPs applied to the NSW Independent Pricing and Regulatory Tribunal (IPART) to have these costs passed through to customers. IPART approved a pass through of $624.2 million for Ausgrid (then Energy Australia). These cost pass throughs explain a significant proportion of the capex increases from 2005/06 to even before the even greater capex increases for the 2009–2014 regulatory control period were proposed. The licence conditions were subsequently amended in December 2007 to delay implementation of some of the requirements (though the DNSPs had already received their pass throughs). The recent amendment to the licence conditions, which took effect from 1 July 2014, removed the design planning requirements. Previously, NSW DNSPs were required to design and plan their networks to a specified standard. Without these requirements, NSW DNSPs can decide how to design and plan their network to meet the specified reliability (and customer service) standards. In particular, the businesses should only be undertaking capex where the benefits outweigh the costs. Removing the design planning requirements should reduce capex requirements for NSW DNSPs. The Australian Energy Market Operator (AEMO) estimated: NSW customers could save up to $50 a year on their electricity bills from 2015 without any detrimental effect to current reliability levels if a probabilistic approach to distribution reliability was adopted over the current and next financial year. The Australian Energy Market Commission (AEMC) estimated that capex could reduce by '$140 million under the modest reduction scenario to $530 million under the extreme reduction scenario' over a five year timeframe for the three NSW DNSPs.
Figure6.8 Ausgrid total capex (including overheads)—historical and forecast for period Source: Historical: IPART Regulatory Accounts (prior to 2010–11) and AER Annual RINs (2010–11 to 2013–14) 2014–2019 period: Ausgrid's Reset RIN, Table 2.1.1 - Standard control services capex). A key driver of capex from 2005 was the NSW licence conditions around design standards. These were removed in July 2014. On 1 August 2005, the NSW Minister for Energy & Utilities introduced the New Licence Condition for NSW DNSPs requiring certain reliability and network design and planning standards to be met. These changes increased the capex requirements of the NSW DNSPs. As the 2004–2009 regulatory determination had already been made, the NSW DNSPs applied to the NSW Independent Pricing and Regulatory Tribunal (IPART) to have these costs passed through to customers. IPART approved a pass through of $624.2 million for Ausgrid (then Energy Australia). These cost pass throughs explain a significant proportion of the capex increases from 2005/06 to even before the even greater capex increases for the 2009–2014 regulatory control period were proposed. The licence conditions were subsequently amended in December 2007 to delay implementation of some of the requirements (though the DNSPs had already received their pass throughs). The recent amendment to the licence conditions, which took effect from 1 July 2014, removed the design planning requirements. Previously, NSW DNSPs were required to design and plan their networks to a specified standard. Without these requirements, NSW DNSPs can decide how to design and plan their network to meet the specified reliability (and customer service) standards. In particular, the businesses should only be undertaking capex where the benefits outweigh the costs. Removing the design planning requirements should reduce capex requirements for NSW DNSPs. The Australian Energy Market Operator (AEMO) estimated: NSW customers could save up to $50 a year on their electricity bills from 2015 without any detrimental effect to current reliability levels if a probabilistic approach to distribution reliability was adopted over the current and next financial year. The Australian Energy Market Commission (AEMC) estimated that capex could reduce by '$140 million under the modest reduction scenario to $530 million under the extreme reduction scenario' over a five year timeframe for the three NSW DNSPs.