providing direct control network services, and complying with its regulatory obligations and requirements. As set out in appendix B we are satisfied that our overall forecast is consistent with the NEO. We consider our decision promotes efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity. We also consider that overall our capex forecast addresses the capital expenditure objectives. In making our final decision, we specifically considered the impact our decision will have on the safety and reliability of SA Power Networks' network. We consider this capex forecast should be sufficient for a prudent and efficient service provider in SA Power Networks' circumstances to be able to maintain the safety, service quality, security and reliability of its network consistent with its current obligations. SA Power Networks' revised proposal SA Power Networks' revised proposal included a total forecast capex of $2070.8 million ($2014–15) for the 2015–20 regulatory control period. This is 23 per cent higher than our preliminary decision and 16.5 per cent lower than SA Power Networks' initial regulatory proposal Figure 6.1 shows the difference between SA Power Networks' initial proposal, its revised proposal and our preliminary decision for the 2015–20 regulatory control period. Figure 6.1 also shows the actual capex SA Power Networks spent during the 2010–15 regulatory control period. Figure Power Networks' total actual and forecast capex Source: AER analysis. SA Power Networks submitted its revised proposal was higher than our preliminary decision in the following key categories: $91 million in replacement capital expenditure to reflect a different predictive modelling output and a higher pole top structure replacement rate $86 million in safety augmentation capital expenditure to enable implementation of its bushfire mitigation program and to deliver on customer concerns $144 million in capex to invest in the non-network category including IT systems, fleet and facilities. AER’s assessment approach This section outlines our approach to capex assessments. It sets out the relevant legislative and rule requirements, and outlines our assessment techniques. It also explains how we derive an alternative estimate of total forecast capex against which
providing direct control network services, and complying with its regulatory obligations and requirements. As set out in appendix B we are satisfied that our overall forecast is consistent with the NEO. We consider our decision promotes efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity. We also consider that overall our capex forecast addresses the capital expenditure objectives. In making our final decision, we specifically considered the impact our decision will have on the safety and reliability of SA Power Networks' network. We consider this capex forecast should be sufficient for a prudent and efficient service provider in SA Power Networks' circumstances to be able to maintain the safety, service quality, security and reliability of its network consistent with its current obligations. SA Power Networks' revised proposal SA Power Networks' revised proposal included a total forecast capex of $2070.8 million ($2014–15) for the 2015–20 regulatory control period. This is 23 per cent higher than our preliminary decision and 16.5 per cent lower than SA Power Networks' initial regulatory proposal Figure 6.1 shows the difference between SA Power Networks' initial proposal, its revised proposal and our preliminary decision for the 2015–20 regulatory control period. Figure 6.1 also shows the actual capex SA Power Networks spent during the 2010–15 regulatory control period. Figure Power Networks' total actual and forecast capex Source: AER analysis. SA Power Networks submitted its revised proposal was higher than our preliminary decision in the following key categories: $91 million in replacement capital expenditure to reflect a different predictive modelling output and a higher pole top structure replacement rate $86 million in safety augmentation capital expenditure to enable implementation of its bushfire mitigation program and to deliver on customer concerns $144 million in capex to invest in the non-network category including IT systems, fleet and facilities. AER’s assessment approach This section outlines our approach to capex assessments. It sets out the relevant legislative and rule requirements, and outlines our assessment techniques. It also explains how we derive an alternative estimate of total forecast capex against which
AER%20-%20Final%20decision%20SA%20Power%20Networks%20distribution%20determination%20-%20Attachment%206%20-%20Capital%20expenditure%20-%20October%202015_0.DOCX