growth 0.63 0.69 0.77 0.77 0.77 0.77 Output growth 1.62 1.44 1.36 1.21 1.18 1.34 Productivity growth 0.00 0.75 0.75 0.75 0.75 0.75 Overall rate of change 2.26 1.38 1.37 1.22 1.19 1.35 AER Price growth 0.35 0.34 0.26 0.38 0.47 0.57 Output growth 1.26 1.19 1.48 1.30 1.62 1.35 Productivity growth – – – – – – Overall rate of change 1.60 1.53 1.74 1.69 2.10 1.92 Source: Ergon Energy revised proposal, Response to information request 87, Ergon Energy's opex model and AER analysis. Preliminary position For our preliminary decision, we did not adopt Ergon Energy's forecast change in price, output and productivity in our forecast rate of change and thus our alternative estimate of opex. Our preliminary position for each rate of change component is outlined below Price growth: for labour price growth we adopted an average of Deloitte Access Economics' (DAE) and Energex's consultant PricewaterhouseCoopers' wage price index (WPI) forecast for the Queensland electricity, gas, water and waste services (EGWWS) industries. For non-labour we adopted the forecast change in the CPI. We applied Economic Insights' benchmark weightings for labour and non-labour. Output growth: we applied the weighted average forecast change in customer numbers, circuit length and ratcheted maximum demand from Ergon Energy's reset RIN. We based the weights of each of these outputs on Economic Insights' opex cost function analysis. Productivity growth: we applied a zero per cent productivity growth estimate. We based this estimate on our considerations of recent productivity trends and whether this would be applicable to the forecast period. This was also consistent with Economic Insights' recommendations. Refer to section B.4 of attachment 7 in our preliminary decision for a detailed explanation of our considerations. Revised proposal and submissions We have maintained the methodology we used in our preliminary decision regarding the forecast rate of change. Ergon Energy raised concerns regarding the price growth and output growth components of our rate of change forecasting approach. Ergon Energy also did not understand why we did not adopt its rate of change estimate given the small differences in the outcome.
growth 0.63 0.69 0.77 0.77 0.77 0.77 Output growth 1.62 1.44 1.36 1.21 1.18 1.34 Productivity growth 0.00 0.75 0.75 0.75 0.75 0.75 Overall rate of change 2.26 1.38 1.37 1.22 1.19 1.35 AER Price growth 0.35 0.34 0.26 0.38 0.47 0.57 Output growth 1.26 1.19 1.48 1.30 1.62 1.35 Productivity growth – – – – – – Overall rate of change 1.60 1.53 1.74 1.69 2.10 1.92 Source: Ergon Energy revised proposal, Response to information request 87, Ergon Energy's opex model and AER analysis. Preliminary position For our preliminary decision, we did not adopt Ergon Energy's forecast change in price, output and productivity in our forecast rate of change and thus our alternative estimate of opex. Our preliminary position for each rate of change component is outlined below Price growth: for labour price growth we adopted an average of Deloitte Access Economics' (DAE) and Energex's consultant PricewaterhouseCoopers' wage price index (WPI) forecast for the Queensland electricity, gas, water and waste services (EGWWS) industries. For non-labour we adopted the forecast change in the CPI. We applied Economic Insights' benchmark weightings for labour and non-labour. Output growth: we applied the weighted average forecast change in customer numbers, circuit length and ratcheted maximum demand from Ergon Energy's reset RIN. We based the weights of each of these outputs on Economic Insights' opex cost function analysis. Productivity growth: we applied a zero per cent productivity growth estimate. We based this estimate on our considerations of recent productivity trends and whether this would be applicable to the forecast period. This was also consistent with Economic Insights' recommendations. Refer to section B.4 of attachment 7 in our preliminary decision for a detailed explanation of our considerations. Revised proposal and submissions We have maintained the methodology we used in our preliminary decision regarding the forecast rate of change. Ergon Energy raised concerns regarding the price growth and output growth components of our rate of change forecasting approach. Ergon Energy also did not understand why we did not adopt its rate of change estimate given the small differences in the outcome.
AER%20-%20Final%20decision%20Ergon%20Energy%20distribution%20determination%20-%20Attachment%207%20-%20Operating%20expenditure%20-%20October%202015.DOCX