Bill saving risk: SA Power Networks starts legal action, industry regulator decision will slash revenue

CUTS to household energy bills worth around $500 dollars are in danger from an SA Power Networks legal action against the industry regulator, claiming its decision will slash its revenue.

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CUTS to household energy bills worth around $500 dollars are in danger from an SA Power Networks legal action against the industry regulator’s decision to slash its revenue.

If the SAPN action is successful, households would be expected to save around $40 a year instead of $140 a year on their bills over the next five years.

The Australian Energy Regulator ruled mid year that SAPN’s revenue would be slashed by $580 million between 2015 and 2020, in part due to the company paying lower interest rates on its borrowings.

But SAPN claimed the regulator made “serious errors’’ when deciding to slash the company’s revenue and it lodged a case against the decision in the Australian Competition Tribunal this week.

The company argued that the revenue reduction “compromises the quality, safety, security and reliability of electricity supply to customers’’.

SAPN spokesman Paul Roberts said if the company won its case, householders’ annual savings would be cut by almost $100 a year during the five-year regulatory period.

“We proposed programs, which were rejected by the AER, aimed at improving our ability to minimise the risk of bushfire,’’ he said.

These programs involved improving SAPN's ability to minimise bushfire risk, including reducing the likelihood of a downed line starting a fire and more frequent inspections in bushfire risk areas.

Cut to household energy bills worth around $500 dollars are in danger from an SA Power Networks legal action against the industry regulator.

Mr Roberts said these programs were “consistent with Victorian changes that have occurred following their review of the Black Saturday bushfires’’.

The company also claimed the regulator’s revenue cut would cause “distortion of efficient investment in the South Australian distribution network’’ and was “at odds’’ with pricing principles.

The state’s leading welfare lobby group has also contested the regulator’s decisions at the tribunal.

In contrast to SAPN, the SA Council of Social Services has argued the company’s revenue should be cut further, which would provide even greater savings to householders network charges.

SACOSS spokesman Dr Greg Ogle said the council was contesting how much SA Power Networks would be allowed to spend on infrastructure such as “poles and wires”.

He said SACOSS was also disputing the rate for providing a return to investors in SA Power Networks’ business.

Dr Ogle estimated a successful SACOSS appeal would boost savings for average residential consumers by about $30 a year more than that provided by the regulator’s decision.

The tribunal is expected to hold direction hearings on the SAPN an SACOSS cases as early as next week and a final decision on each could be made in the new year.

Revelations of SAPN’s legal challenge cames as Federal Government figures released this week show SA householders paid the highest electricity bills — an average of $2150 a year — in the nation.