Australian Energy Regulator (AER) published Endeavour Energy Regulatory Proposal for 2024-2029

Sydney 223 February 2023: After 20 months of engaging with customers to develop a Regulatory Proposal for 2024-2029, Endeavour Energy welcomes the commencement of the AER’s formal public consultation following a compliance check on its Proposal.

“Our Proposal is defined by a focus on value for money with an increased emphasis on our customers’ emerging priorities of innovation and resilience,” Endeavour Energy CEO Guy Chalkley said

“We have worked hard to keep our distribution network costs stable and relatively consistent for our customers by tightly managing the costs we can control to keep our contribution to customer bills as low as possible.

“This Proposal means our customers will continue to benefit from the lowest average energy price in NSW and some of the lowest distribution energy prices in the National Energy Market per AER benchmarking.

Distribution  Networks Average Price Benchmark FY2021¹

“We are pleased to make a Proposal that is lean and effective, delivering meaningful service improvements in the areas most important to our customers. We have left no stone unturned when it comes to delivering an affordable and valued service.

“Our Regulatory Proposal for 2024-2029 includes a 15% real reduction in operating costs and an 8% real reduction in gross capital costs compared to the 2019-2024 period. This is despite increasing demands on our service with an unprecedented 10% forecast growth in customer numbers in our network area to 2029, and a 5.3% increase in energy supplied.

“We are able to make a Proposal that reduces our regulated asset base and readies our customers for historic growth in Western Sydney including Sydney’s second international airport and surrounding precincts because of our continued trend in efficiency gains and improved network utilisation,” Mr Chalkley said.

Despite making a Proposal that focuses on affordability by lowering our operational and capital expenditure, prices are rising due to economic factors outside our control, including rising interest rates and inflation.

As much as 95% of the increase in our proposed revenue for the 2024-2029 period is due to these factors which are outside our control, reflecting our ongoing commitment to affordability.

“The combination of our restrained approach to investment and our continued commitment to efficiency means total expenditure per customer is expected to decline by 22%, even as our customer base grows significantly due to the historic growth taking place in Western Sydney,” Mr Chalkley said.

“Our measured approach means that over 2024-2029, the average price increase in distribution services is limited to $48 for a typical residential customer and $86 for small-medium businesses when compared to 2024.”

Mr Chalkley said compared to the price at the end of the current period (2019-2024) our Proposal represents about a 3% increase in the average price of our customers’ total electricity bill over the 2024-2029 period. This is because distribution services comprise less than a third of a customer’s power bill.

Endeavour Energy has demonstrated these average cost impacts over the 2024-2029 period using a tariff that applies to 90% of our residential and small business customers because we believe this is a transparent approach that captures the cumulative impact of annual increases and is consistent with AER assessment methodology.

Alternatively, if we were to present our cost impacts for residential and small business customers in terms of the “average increase per annum” (averaging the increase in price from one year to the next) it would look like a $5 increase per annum.

“We have been single-minded in our focus on the customers’ interest. At a foundational level, that means affordability.  It also means maintaining a safe, resilient, reliable electricity network, servicing the growth of our communities, and increasingly facilitating new customer energy choices,” Mr Chalkley said.

Mr Chalkley said Endeavour Energy’s customers expect us to deliver them savings now and in the long term by investing in innovative technologies that make the network smarter and more sustainable.

“They also want the network to be able to withstand and recover quickly from the impacts of major weather events, which are forecast to happen with greater frequency and greater intensity. Our customers expect a reliable service that is resilient to the challenges of climate change.”

“We have listened and are proposing modest and targeted investments to deliver the service outcomes our customers most valued,” Mr Chalkley said.

These include:

• $65 million over 5 years to support new technology to host customer generated resourcessuch as electric vehicles, solar and batteries.
• $28 million in resilience investment to deliver an expanded but highly targeted program of works, such as raising conductors to avoid floods and installing covered conductors in bushfire prone areas, where customers will experience a real difference.

The Regulatory Proposal and a Plain English Summary of the Regulatory Proposal are available at https://yoursay.endeavourenergy.com.au/.

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¹ Calculated as Actual Revenue divided by Actual Energy Delivered for each network in FY21 as sourced from the AER’s Electricity Network Performance Report 2022 – Electricity DNSP Operational Performance Data – 2006-2021 (published July 2022).

Background

• Every five years, Endeavour Energy is required to submit a plan to the AER that details our proposed service delivery and prices for the next five-year period.
• This Regulatory Proposal covers the period 1 July 2024 to 30 June 2029 and was required to be submitted to the AER by January 2023.

About Endeavour Energy

• Powers the lives of more than 2.7 million people, living and working in Sydney’s Greater West, the Blue Mountains, Southern Highlands, Illawarra, and South Coast of NSW.
• Our electricity supply area includes one of the fastest growing regions in Australia, with 3 million people and businesses are expected to live Sydney’s Greater West by 2029 and includes Sydney’s second international airport and surrounding aerotropolis.
• We are working with our customers to support the transition to a modern grid, where solar, batteries, microgrids and smart meters will support the shift to a low carbon environment.
• Endeavour Energy is an electricity distribution network.
  • Distribution is part of a larger energy supply chain that includes generation, transmission and retailers.
  • Distribution charges make up less than one third of the customer’s total energy bill.
• Endeavour Energy’s distribution costs are the lowest in NSW among the lowest (per unit of electricity served) in the National Electricity Market.