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Errors in Australian Energy Regulator’s Draft Decision on Ergon Energy’s 2016 Tariff Structure Statement

This report finds that the degree of network congestion upon which the proposals in Ergon’s Tariff Structure Statement depend has been over-stated by two (2) orders of magnitude based on Ergon’s public data on zone substation congestion. It follows that the AER’s August 2016 Draft Decision finding that the ETSS contributes sufficiently to the achievement of compliance with the pricing rules is contradicted by reliable evidence from Ergon itself. Provisional approval of the ETSS should therefore be revoked in the AER’s Final Decision.

The AER appears to have applied similar approaches and methodologies in its assessment of other Tariff Structure Statements, with the reliance on misleading average daily profiles evident in the AER’s August 2016 Final Decision on Victorian Tariff Statements. In general there is an apparent absence in AER processes of seeking information necessary to enable cross checks of conclusions. It is therefore possible that the AER’s assessment of other Tariff Statements may also be in error.

This report is the latest in a sequence prepared for CANEGROWERS in submissions to the AER, and is published on the CANEGROWERS website here. The AER’s Ergon Energy’s Tariff Structure Statement website is located here.

Authors

Dr James Swansson

James advises on public policy and regulatory economics.

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Simon Orme

Simon provides expert consulting services.

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