Table 191 Revenue and cost inputs for the four scenarios Scenario 1 Scenario 2 Scenario 3 Scenario 4 Smoothed revenue Smoothed revenue Smoothed revenue from the from the from the Smoothed revenue indicative final indicative final indicative final a Revenue from the decisiona decision a decision decision including debt including debt including debt convergence. convergence convergence Based on revised Based on revised proposal except for: proposal except for: hybrid tax hybrid tax calculation calculation All costs from revised proposal except for: debt debt All costs from revised convergence convergence proposal except hybrid tax Costs for hybrid tax calculation 10 % per 20 % per annum calculation. reductions reductions debt between forecast between forecast convergence opex costs and opex costs and benchmark benchmark efficient opex efficient opex allowance allowance More favourable to case scenario. More favourable to Endeavour Energy Importantly, this Endeavour Energy than Scenario 3. This More favourable to scenario than Scenario 2. This scenario reflects Endeavour Energy excludes the scenario reflects faster opex efficiency than Scenario 1. This effects of debt partial efficiency savings than scenario scenario is more Comment convergence. savings by Endeavour 2. In combination, closely reflective of Excluding debt Energy to reduce the scenarios 3 and 4 the final decision convergence difference between its illustrate the circumstances than artificially proposed opex costs sensitivity of the scenario 1. worsens the and our final decision outcome to the ability outcomes. opex determination. to make efficiency savings. (a) At the time this analysis was provided to RSM Bird Cameron, decision inputs were not completely finalised. However, they are closely reflective of the final decision inputs.
Table 191 Revenue and cost inputs for the four scenarios Scenario 1 Scenario 2 Scenario 3 Scenario 4 Revenue Smoothed revenue from the decision Smoothed revenue from the indicative final decisiona including debt convergence. Smoothed revenue from the indicative final decision a including debt convergence Smoothed revenue from the indicative final a decision including debt convergence Costs All costs from revised proposal except for hybrid tax calculation. All costs from revised proposal except for: hybrid tax calculation debt convergence Based on revised proposal except for: hybrid tax calculation debt convergence 10 % per reductions between forecast opex costs and benchmark efficient opex allowance Based on revised proposal except for: hybrid tax calculation debt convergence 20 % per annum reductions between forecast opex costs and benchmark efficient opex allowance Comment case scenario. Importantly, this scenario excludes the effects of debt convergence. Excluding debt convergence artificially worsens the outcomes. More favourable to Endeavour Energy than Scenario 1. This scenario is more closely reflective of the final decision circumstances than scenario 1. More favourable to Endeavour Energy than Scenario 2. This scenario reflects partial efficiency savings by Endeavour Energy to reduce the difference between its proposed opex costs and our final decision opex determination. More favourable to Endeavour Energy than Scenario 3. This scenario reflects faster opex efficiency savings than scenario 2. In combination, scenarios 3 and 4 illustrate the sensitivity of the outcome to the ability to make efficiency savings. (a) At the time this analysis was provided to RSM Bird Cameron, decision inputs were not completely finalised. However, they are closely reflective of the final decision inputs.
AER%20-%20Final%20decision%20Endeavour%20Energy%20distribution%20determination%20-%20Attachment%2019%20-%20Analysis%20of%20financial%20viability%20-%20April%202015.docx