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AER’s Draft Decision on the Endeavour Energy 2019 to 2024 Distribution Determination: Submission

We appreciate the opportunity to respond to the Australian Energy Regulator’s (AER) Draft Decision: Endeavour Energy Distribution Determination 2019 to 24 (the Draft Decision).

We have assessed Endeavour Energy’s revised proposal on a decision-as-a-whole basis. In addition to the elements below, we have taken into consideration pricing outcomes for consumers and capital
expenditure (capex), including the treatment of the Western Sydney Aerotropolis.

Our view is that Endeavour Energy’s revised proposal is capable of acceptance if Endeavour Energy agrees to:

• meet the AER’s minimum productivity requirement of one per cent;
• accept the 2018 Rate of Return Guideline; and
• apply the outcomes of the AER’s tax review.

Endeavour Energy’s Revised Proposal is $45 million lower than the AER’s Draft Decision. This means that over the next six years, average bills should fall (in real terms) by $66 for the average household
and $113 for the average small business. This is welcome price relief after many years of price increases undermined energy affordability.

We were pleased that the revised capex proposal in Endeavour Energy’s submission reflected consumer preferences for:

• a change to capital contributions so that households and small businesses will not be
subsidising the connection costs of developers; and

• Endeavour Energy pursuing options other than augmentation to meet network needs. For
example, improved utilisation of the existing assets that consumers are continuing to pay for
and the pursuit of non-network options. [1]1 Endeavour Energy, Revised Regulatory Proposal 1 July 2019 – 30 June 2024, pages 19-20.

We are now more comfortable with the treatment of uncertainty for the Western Sydney Aerotropolis. Endeavour Energy’s approach is to increase the overall $1.70 billion capex proposal by $39.3 million (real, 2018-19) for the Aerotropolis. This sees the actual cost allocation for the Aerotropolis reduced from $61.2 million, which is a reduction of 35.7 per cent

The full submission can be read here.

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