Figure TasNetworks' capital expenditure Source: TasNetworks revenue proposal, AER analysis Summary of analysis and reasons TasNetworks' proposed total forecast capex of $275.9 million ($2013–14). Its proposal was largely consistent with the estimate of total forecast capex produced by our own assessment. The exception to this finding relates to growth related capex. This proposed forecast included $36.8 million for growth related capex driven primarily by two individual projects: the Waddamana–Palmerston 220 kV security augmentation project, and the Newton–Queenstown security augmentation project. Based on updated information, AEMO and TasNetworks have both submitted that these projects could be prudently deferred until after the 2014-19 period. We accept that these projects are unlikely to be required in the period covered by this decision. TasNetworks also provided suggested revised forecasts of augex and repex to reflect the deferral of the two augmentation projects from the period. Our substitute estimate was informed by these revisions. The result is a $35.2 million reduction in TasNetworks' proposed augex (to $1.6 million), and a corresponding upwards revision to TasNetworks proposed forecast repex (by $5.6 million) to replace a number of aging assets that would have otherwise been replaced as part of the augmentation projects. Operating expenditure (opex) Opex includes forecast operating, maintenance and other non-capital costs incurred in the provision of transmission network services. It includes labour costs and other non-capital costs that TasNetworks is likely to require during the 2014–19 period for the efficient operation of its network. Draft decision We are satisfied that TasNetworks' total opex forecast reasonably reflects the opex criteria. Table 86 shows our draft decision, which accepts TasNetworks' proposal. This includes the 2014-15 transitional regulatory control period.
Figure TasNetworks' capital expenditure Source: TasNetworks revenue proposal, AER analysis Summary of analysis and reasons TasNetworks' proposed total forecast capex of $275.9 million ($2013–14). Its proposal was largely consistent with the estimate of total forecast capex produced by our own assessment. The exception to this finding relates to growth related capex. This proposed forecast included $36.8 million for growth related capex driven primarily by two individual projects: the Waddamana–Palmerston 220 kV security augmentation project, and the Newton–Queenstown security augmentation project. Based on updated information, AEMO and TasNetworks have both submitted that these projects could be prudently deferred until after the 2014-19 period. We accept that these projects are unlikely to be required in the period covered by this decision. TasNetworks also provided suggested revised forecasts of augex and repex to reflect the deferral of the two augmentation projects from the period. Our substitute estimate was informed by these revisions. The result is a $35.2 million reduction in TasNetworks' proposed augex (to $1.6 million), and a corresponding upwards revision to TasNetworks proposed forecast repex (by $5.6 million) to replace a number of aging assets that would have otherwise been replaced as part of the augmentation projects. Operating expenditure (opex) Opex includes forecast operating, maintenance and other non-capital costs incurred in the provision of transmission network services. It includes labour costs and other non-capital costs that TasNetworks is likely to require during the 2014–19 period for the efficient operation of its network. Draft decision We are satisfied that TasNetworks' total opex forecast reasonably reflects the opex criteria. Table 86 shows our draft decision, which accepts TasNetworks' proposal. This includes the 2014-15 transitional regulatory control period.
AER%20-%20Draft%20decision%20TasNetworks%20transmission%20determination%20-%20Overview%20-%20November%202014.DOCX