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The Australian Energy Regulator decision on public lighting is a disturbing precedent

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The Australian Energy Regulator (AER) decision to retrospectively change the basis for charging for public lighting sets a disturbing precedent for Australian businesses operating under regulation.

The AER has overturned a decision made in 2009 by the former State economic regulator, the Essential Services Commission of SA (ESCoSA).

SA Power Networks had relied on the ESCoSA decision in determining the value of its assets in setting public lighting charges in the 2010-2015 period. Local councils claimed that a lower value should have been used. 

The AER has decided to set aside the 2009 ESCoSA decision and ordered SA Power Networks to pay back public lighting customers about $13 million for the 2010-2015 period. 

SA Power Networks considers that the AER’s determination reflects a difference of view on the appropriate assumption for street light asset life, a core component of cost determination. 

SA Power Networks believes that in determining its charges it should have been able to rely on the 2009 determination. 

“To retrospectively change a decision made by another Regulator ten years ago and then charge us interest for the delay in determining this issue, is disappointing and an affront to fairness,” an SA Power Networks spokesman said. 

“We have concerns with the AER’s reasoning for its decision and the process it undertook to reach the determination and we have raised these concerns directly with the AER. 

“Regulation by retrospective decision making sets a disturbing precedent and can only add to the level of risk confronting participants in the energy sector,” the spokesman said. 

“It is critically important that companies can be confident that decisions of a Regulator today can be relied upon and not re-opened in the future. In this case, SA Power Networks has complied with all past regulatory decisions.

“As a distributor operating under the current regulatory regime we are prevented from challenging the merits of the AER decision. This means the AER cannot be held to account for its decision making, which is something that should be at the core of a well-balanced regulatory system that provides confidence to all who operate in it.

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