basis rather than only by the local efficient cost of each service from distributor. customers using that service. Negotiated service Services we consider require a less Distributors and customers are able to prescriptive regulatory approach negotiate service and price according because all relevant parties have to a framework established by the sufficient countervailing market power to NER. We are available to arbitrate if negotiate the provision of those services. necessary. Unclassified distribution Distribution services that are contestable We have no role in regulating these services will not be classified. services. Non-distribution Services that are not distribution We have no role in regulating services services. services. Source: AER Our proposed position is to change the classification of some of TasNetworks' distribution services for the 2019−24 regulatory control period. Specifically, we proposed to reclassify new/emerging public lighting technology from negotiated to alternative control. Otherwise we have clarified service descriptions to better align with the services being provided, create consistency and predictability across jurisdictions as far as practicable in how new distribution services might be classified. Our proposed service classification for TasNetworks’ distribution services is set out in figure 1 below. Figure 1 AER proposed classification of TAS distribution services Source: AER Our final F&A decision on service classification is not binding for our determination on TasNetworks' regulatory proposal. However, under the NER we may only change our classification approach if unforeseen circumstances arise, justifying a departure from our final F&A position. Control mechanisms Following on from service classifications, our determinations impose controls on direct control service prices and/or their revenues. We may only accept or approve control mechanisms in a network’s regulatory proposal if they are consistent with our final F&A. In deciding control mechanism forms, we must select one or more from those listed in the NER. These include price schedules, caps on the prices of individual services, weighted average price caps, revenue caps, average revenue caps and hybrid control mechanisms. Our decision on the form of control mechanisms for TasNetworks’ distribution business is: standard control services revenue cap – alternative control services caps on the prices of individual services. –
basis rather than only by the local distributor. efficient cost of each service from customers using that service. Negotiated service Services we consider require a less prescriptive regulatory approach because all relevant parties have sufficient countervailing market power to negotiate the provision of those services. Distributors and customers are able to negotiate service and price according to a framework established by the NER. We are available to arbitrate if necessary. Unclassified distribution services Distribution services that are contestable will not be classified. We have no role in regulating these services. Non-distribution services Services that are not distribution services. We have no role in regulating services. Source: AER Our proposed position is to change the classification of some of TasNetworks' distribution services for the 2019−24 regulatory control period. Specifically, we proposed to reclassify new/emerging public lighting technology from negotiated to alternative control. Otherwise we have clarified service descriptions to better align with the services being provided, create consistency and predictability across jurisdictions as far as practicable in how new distribution services might be classified. Our proposed service classification for TasNetworks’ distribution services is set out in figure 1 below. Figure 1 AER proposed classification of TAS distribution services Source: AER Our final F&A decision on service classification is not binding for our determination on TasNetworks' regulatory proposal. However, under the NER we may only change our classification approach if unforeseen circumstances arise, justifying a departure from our final F&A position. Control mechanisms Following on from service classifications, our determinations impose controls on direct control service prices and/or their revenues. We may only accept or approve control mechanisms in a network’s regulatory proposal if they are consistent with our final F&A. In deciding control mechanism forms, we must select one or more from those listed in the NER. These include price schedules, caps on the prices of individual services, weighted average price caps, revenue caps, average revenue caps and hybrid control mechanisms. Our decision on the form of control mechanisms for TasNetworks’ distribution business is: standard control services – revenue cap alternative control services – caps on the prices of individual services.
AER%20-%20Final%20framework%20and%20approach%20for%20TasNetworks%20distribution%20and%20transmission%20-%20July%202017.docx