Alternative control services do not form part of Energex's revenue cap. Rather, the prices of these services are set individually. Our preliminary decision is to maintain the approach adopted in our F&A, that the form of control mechanism to apply to Energex's alternative control services will be price caps. Energex must demonstrate compliance with the control mechanism through an annual pricing proposal. To avoid large metering transfer or exit fees, we consider Energex should recover the residual cost of its redundant meters from all customers through an alternative control service charge. By switching, customers may avoid the operating costs that would be charged by Energex for type 5 or 6 metering services. We did not approve large upfront metering transfer or exit fees which would be a barrier to competitive entry. Instead, when a customer switches to a competitive metering provider, they will continue to pay a regulated annual charge that recovers the fixed capital costs associated with their past regulated type 5 or 6 metering service. On 26 March 2015, the AEMC made a draft determination and draft rule in relation to the provision of metering and related services in the NEM. The rule change proposes to expand competition in metering and related services and facilitate a market led roll out of advanced metering technology. We have sought to create a regulatory framework robust enough to handle the transition to competition once the rule change takes effect from 1 July 2017. Our preliminary decision does not accept Energex's proposed: annual metering service charge, because the forecast capital and labour costs do not reasonably reflect the efficient costs of a prudent operator price caps for new and upgraded connections, for similar reasons transfer or exit fee to switching customers to recover residual metering or administrative costs. Incentive schemes Incentive schemes are a component of incentive-based regulation and complement our approach to assessing efficient costs. The incentive schemes that will apply to Energex are: The efficiency benefit sharing scheme (EBSS) The capital expenditure sharing scheme (CESS) The service target performance incentive scheme (STPIS) The demand management incentive scheme (DMIS). Efficiency benefit sharing scheme The efficiency benefit sharing scheme (EBSS) provides an additional incentive for service providers to pursue efficiency improvements in opex.
Alternative control services do not form part of Energex's revenue cap. Rather, the prices of these services are set individually. Our preliminary decision is to maintain the approach adopted in our F&A, that the form of control mechanism to apply to Energex's alternative control services will be price caps. Energex must demonstrate compliance with the control mechanism through an annual pricing proposal. To avoid large metering transfer or exit fees, we consider Energex should recover the residual cost of its redundant meters from all customers through an alternative control service charge. By switching, customers may avoid the operating costs that would be charged by Energex for type 5 or 6 metering services. We did not approve large upfront metering transfer or exit fees which would be a barrier to competitive entry. Instead, when a customer switches to a competitive metering provider, they will continue to pay a regulated annual charge that recovers the fixed capital costs associated with their past regulated type 5 or 6 metering service. On 26 March 2015, the AEMC made a draft determination and draft rule in relation to the provision of metering and related services in the NEM. The rule change proposes to expand competition in metering and related services and facilitate a market led roll out of advanced metering technology. We have sought to create a regulatory framework robust enough to handle the transition to competition once the rule change takes effect from 1 July 2017. Our preliminary decision does not accept Energex's proposed: annual metering service charge, because the forecast capital and labour costs do not reasonably reflect the efficient costs of a prudent operator price caps for new and upgraded connections, for similar reasons transfer or exit fee to switching customers to recover residual metering or administrative costs. Incentive schemes Incentive schemes are a component of incentive-based regulation and complement our approach to assessing efficient costs. The incentive schemes that will apply to Energex are: The efficiency benefit sharing scheme (EBSS) The capital expenditure sharing scheme (CESS) The service target performance incentive scheme (STPIS) The demand management incentive scheme (DMIS). Efficiency benefit sharing scheme The efficiency benefit sharing scheme (EBSS) provides an additional incentive for service providers to pursue efficiency improvements in opex.
AER%20-%20Preliminary%20decision%20Energex%20distribution%20determination%20-%20Overview%20-%20April%202015.DOCX