progressively downgraded its demand forecasts since its initial regulatory proposal for the previous 2009–14 regulatory control period. In October 2014, Ausgrid stated that improvements in its forecasting process, and not just economic growth forecasts, explained its lower demand forecasts. Ausgrid has improved its forecasting methodology to take better account of top down econometric factors and to incorporate a revised normalisation approach. Ausgrid's revised normalisation approach improves its calculation of its weather correction metric and is carried out at the substation level on a seasonal basis. As a result, the starting point at many zone substations has changed. This, combined with a lower underlying growth projection, has resulted in a reduction in forecast demand at most points on the system. The AEMO forecasted similar trends of low system demand growth for Ausgrid's network and for the NSW region more generally. We note that AEMO had downgraded its demand forecast for the NSW region in its most recent report. Ausgrid's regulatory proposal described its demand forecasting methods, including approaches to: weather correction accounting for spot loads accounting for transfers accounting for embedded generation. As part of our final decision on system demand forecasts, we compared Ausgrid's revised system demand forecast to the sum of AEMO's connection point (CP) forecasts for Ausgrid's network. Figure 611 and Table C1 provide an overall system level view of Ausgrid's revised demand forecasts, the changes made since its regulatory proposal and a comparison of the AEMO forecasts. Figure Maximum system demand (summer coincident) Table Maximum system demand - Weather corrected (50% PoE) (MW) Average annual 2014-15 2015-16 2016-17 2017-18 2018-19 growth (2014-19) Regulatory proposal (May 2014) - 5594 5591 5667 5778 5878 0.70% Summer Revised proposal (January 2015) - 4888 4812 4750 4719 4716 -0.21% Summer
progressively downgraded its demand forecasts since its initial regulatory proposal for the previous 2009–14 regulatory control period. In October 2014, Ausgrid stated that improvements in its forecasting process, and not just economic growth forecasts, explained its lower demand forecasts. Ausgrid has improved its forecasting methodology to take better account of top down econometric factors and to incorporate a revised normalisation approach. Ausgrid's revised normalisation approach improves its calculation of its weather correction metric and is carried out at the substation level on a seasonal basis. As a result, the starting point at many zone substations has changed. This, combined with a lower underlying growth projection, has resulted in a reduction in forecast demand at most points on the system. The AEMO forecasted similar trends of low system demand growth for Ausgrid's network and for the NSW region more generally. We note that AEMO had downgraded its demand forecast for the NSW region in its most recent report. Ausgrid's regulatory proposal described its demand forecasting methods, including approaches to: weather correction accounting for spot loads accounting for transfers accounting for embedded generation. As part of our final decision on system demand forecasts, we compared Ausgrid's revised system demand forecast to the sum of AEMO's connection point (CP) forecasts for Ausgrid's network. Figure 611 and Table C1 provide an overall system level view of Ausgrid's revised demand forecasts, the changes made since its regulatory proposal and a comparison of the AEMO forecasts. Figure Maximum system demand (summer coincident) Table Maximum system demand - Weather corrected (50% PoE) (MW) 2014-15 2015-16 2016-17 2017-18 2018-19 Average annual growth (2014-19) Regulatory proposal (May 2014) - Summer 5594 5591 5667 5778 5878 0.70% Revised proposal (January 2015) - Summer 4888 4812 4750 4719 4716 -0.21%
AER%20-%20Final%20Decision%20Ausgrid%20distribution%20determination%20-%20Attachment%206%20-%20Capital%20expenditure%20-%20April%202015.docx