Introduction of chapter 5A - - 1.0 1.0 18.3 3.1 17.7 10.2 Source: Powercor, Regulatory proposal, 2015; AER preliminary decision opex model; Powercor, Revised regulatory proposal, January 2016; AER final decision opex model. Powercor's initial proposal and preliminary position In its initial proposal, Powercor proposed five step changes to its base level of standard control services opex. Powercor stated the step changes reflect new or increased activities, or new or increased costs. In addition, Powercor also forecast several categories of opex using a category specific forecasting approach (defined benefits superannuation, regulatory reset costs, GSL payments). The effect of this approach was a forecast incremental increase in opex in one category (defined benefits superannuation) and a decrease in two categories (reset costs/GSL payments). In our preliminary decision, we included one step change in our opex forecast. We were satisfied that additional opex associated with Powercor’s customer relationship management system arises due to new regulatory requirements, although we included a lower amount than Powercor had forecast. Powercor's revised proposal and submissions In its revised proposal, Powercor accepted our revised forecast for the costs of its customer relationship management system. It did not re-propose step change for its customer charter and superannuation (accumulation members) or category specific forecasts for defined benefits superannuation and regulatory reset costs. Powercor re-proposed step changes for monitoring IT security and mobile devices. It revised its estimate for its mobile devices step change. Powercor proposed new step changes for: the introduction of cost reflective tariffs RIN compliance introduction of chapter 5A. We received general comments about our consideration of step changes from VECUA and the CCP. While VECUA has some residual concerns with the step changes we allowed in our preliminary decision, overall, it agreed with our assessments of the Victorian service providers' proposed step changes. The CCP considered we were correct to reject most of the step changes in the Victorian service providers' proposals. It considered there is a tendency for the service providers to present a range of small
Introduction of chapter 5A - - 1.0 1.0 18.3 3.1 17.7 10.2 Source: Powercor, Regulatory proposal, 2015; AER preliminary decision opex model; Powercor, Revised regulatory proposal, January 2016; AER final decision opex model. Powercor's initial proposal and preliminary position In its initial proposal, Powercor proposed five step changes to its base level of standard control services opex. Powercor stated the step changes reflect new or increased activities, or new or increased costs. In addition, Powercor also forecast several categories of opex using a category specific forecasting approach (defined benefits superannuation, regulatory reset costs, GSL payments). The effect of this approach was a forecast incremental increase in opex in one category (defined benefits superannuation) and a decrease in two categories (reset costs/GSL payments). In our preliminary decision, we included one step change in our opex forecast. We were satisfied that additional opex associated with Powercor’s customer relationship management system arises due to new regulatory requirements, although we included a lower amount than Powercor had forecast. Powercor's revised proposal and submissions In its revised proposal, Powercor accepted our revised forecast for the costs of its customer relationship management system. It did not re-propose step change for its customer charter and superannuation (accumulation members) or category specific forecasts for defined benefits superannuation and regulatory reset costs. Powercor re-proposed step changes for monitoring IT security and mobile devices. It revised its estimate for its mobile devices step change. Powercor proposed new step changes for: the introduction of cost reflective tariffs RIN compliance introduction of chapter 5A. We received general comments about our consideration of step changes from VECUA and the CCP. While VECUA has some residual concerns with the step changes we allowed in our preliminary decision, overall, it agreed with our assessments of the Victorian service providers' proposed step changes. The CCP considered we were correct to reject most of the step changes in the Victorian service providers' proposals. It considered there is a tendency for the service providers to present a range of small
AER%20-%20Final%20decision%20Powercor%20distribution%20determination%20-%20Attachment%207%20-%20Operating%20expenditure%20-%20May%202016.DOCX