Final decision

11.2SA Power Networks' revised proposal and submissions

SA Power Networks proposed $140.0 million ($2014–15) in step changes in its revised proposal. SA Power Networks' revised step changes contribute 9.8 per cent to its total opex forecast. It did not specify why it did not repropose many step changes it proposed in its initial proposal. SA Power Networks' revised proposal on step changes is set out below in Table C. to Table C..

We received several submissions supporting our preliminary position on most step changes. These included submissions from:

Business SA¹⁴⁹

Consumer Challenge Panel¹⁵⁰

Energy Consumers Coalition of South Australia (ECCSA)¹⁵¹

Energy Retailers Association of Australia (ERAA)¹⁵²

Origin Energy¹⁵³

South Australian Council of Social Services (SACOSS).¹⁵⁴

Business SA agreed there are few changes to the operating environment facing SA Power Networks during 2015–20 with respect to regulatory obligations. It submitted that while customers may express a preference for certain services, it does not necessarily mean that an increase in total forecast expenditure is required.¹⁵⁵

The Consumer Challenge Panel (CCP) agreed that most step changes SA Power Networks proposed were already captured by base opex or output growth.¹⁵⁶ It also considered there should be a negative step change for vegetation management.¹⁵⁷

Table C. Legal and regulatory step changes ($ million, 2014–15)

Proposal	SA Power Networks initial proposal	AER preliminary decision	SA Power Networks revised proposal	AER final decision
Asset inspections - no access poles	23.4	-	21.9	-
Asset inspections - underground cables	3.1	-	-	-
Asset inspections - bushfire inspection frequency	15.6	-	12.9	-
WH&S - Asset inspections 2 person crews	2.8	-	2.8	-
WH&S - Network operations	4.0	-	-	-
WH&S - Fleet monitoring	2.2	-	2.2	-
WH&S - Fleet inspections	3.9	-	3.9	-
New RIN requirements	9.2	-	6.4	6.4
National Energy Retail Law Regulations	4.3	-	-	-
National Energy Customer Framework	1.3	1.3	1.3	1.3
Demand Side Participation	33.8	-	13.3	5.1
Environmental Management	1.4	-	-	-
Total	105.0	1.3	64.8	12.7

Source: SA Power Networks, Reset RIN 2015–20; AER, Opex model for SA Power Networks - preliminary decision; SA Power Networks, Revised Reset RIN 2015–20; AER, Opex model for SA Power Networks ─ final decision.

Table C. Capital program impact step changes ($ million, 2014–15)

Proposal	SA Power Networks initial proposal	AER preliminary decision	SA Power Networks revised proposal	AER final decision
Information Technology	43.9	-	19.4	4.0
Mobile radio	7.9	7.9	12.8	12.8
Carrier costs, radio licensing and planning	5.1	-	-	-
Network Management Centre	3.6	-	-	-
Data quality	3.9	-	3.9	-
Substation maintenance - disconnectors	2.4	-	-	-
Flexible load management	1.0	-		-
Total	69.6	7.9	36.1	16.7

Source: SA Power Networks, Reset RIN 2015–20; AER, Opex model for SA Power Networks - preliminary decision; SA Power Networks, Revised Reset RIN 2015–20; AER, Opex model for SA Power Networks - final decision.

Table C. Customer driven initiatives and changing community expectations ($ million, 2014–15)

Proposal	SA Power Networks initial proposal	AER preliminary decision	SA Power Networks revised proposal	AER final decision
Change in NBFRA trimming cycle	13.5	-	13.5	-
Tree removal and replacement - BFRA	9.2	-	10.5	-
Tree removal and replacement - NBFRA	6.1	-	6.1	-
Advanced tree trimming practices	1.9	-	1.9	-
Community engagement and consultation - vegetation management	1.2	-	1.2	-
Customer education and consultation	1.7	-	1.7	-
Self-service products	1.0	-	1.0	-
Customer service team	1.6	-	1.6	-
Bushfire education campaign	2.6	-	2.6	-
Extreme weather education campaign	1.9	-	1.9	-
Farmers and sailors - education campaign	0.9	-	0.9	-
Total	41.6	-	42.8	-

Source: SA Power Networks, Reset RIN 2015–20; AER, Opex model for SA Power Networks - preliminary decision; SA Power Networks, Revised Reset RIN 2015–20; AER, Opex model for SA Power Networks ─ final decision.

Table C. Finance related operating expenditure ($ million, 2014–15)

Proposal		SA Power Networks initial proposal	AER preliminary decision	SA Power Networks revised proposal	AER final decision
Insurance premiums	3.0		-	-	-
Superannuation	–2.4		-	-	-
Total	0.6		-	-	-

Source: SA Power Networks, Reset RIN 2015–20; AER, Opex model for SA Power Networks - preliminary decision; SA Power Networks, Revised Reset RIN 2015–20; AER, Opex model for SA Power Networks ─ final decision.

Table C. Base year adjustments ($ million, 2014–15)

Proposal	SA Power Networks initial proposal	AER preliminary decision	SA Power Networks revised proposal	AER final decision
Regulatory proposal	–8.2	-	-	-
Distribution licence fee	–5.5	–5.0	–5.0^158	–5.0
Non network solution	1.3	-	1.3^159	-
Property	2.0	-	-	-
Total	–10.4	–5.0	–3.7	–5.0

Source: SA Power Networks, Reset RIN 2015–20; AER, Opex model for SA Power Networks - preliminary decision; SA Power Networks, Revised Reset RIN 2015–20; AER, Opex model for SA Power Networks ─ final decision.