SAPN takes battle over network costs to Federal Court

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SA government vows to “fight tooth and nail” against network operator as SAPN takes revenue challenge to federal court.

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A pricing battle between South Australia Power Networks and the Australian Energy Regulator is headed for Federal Court, in a last-ditch effort to by the network to pass an extra $250 million in grid maintenance and labour costs on to consumers.

State energy minister Tom Koutsantonis said on Monday that the Weatherill government was seeking legal advice on behalf of South Australian consumers after SA Power Networks – whose costs already represent more than 35 per cent of an average annual electricity bill – took its case to the Federal Court on Friday.

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SAPN, the monopoly operator of the state’s poles, wires and sub stations, has asked the Federal Court to review the determination of the Australian Competition Tribunal, which last month upheld the Australian Energy Regulator’s revenue determination of $3.84 billion.

SAPN, which had sought $4.53 billion for the five-year period starting July 1 2015, asked the Australian Competition Tribunal for a merit review of the determination, arguing the AER had made errors in its decision, and seeking an additional $250 million for financing costs, labour costs and additional bushfire safety.

The involvement of the Federal Court in the case again highlights the flaws of the national merit review system, which has seen a number of the AER’s recent revenue determinations put through lengthy and messy appeals processes.

As ITK principal analyst David Leitch noted last month, the regulator remains embroiled in an epic battle with NSW network operator Ausgrid, over a determination on prices which began in 2014.

Similarly, that case has gone from the ACT to the federal court, where arguments were heard in late October. The cost of the proceedings is well over $100 million so far, and a decision is not expected until early 2017.

A review and appeal has also been brought by CitiPower/Powercor in Victoria, and is still being heard by the Tribunal. A decision on this is also expected in early 2017.

As Leitch said in separate analysis, these appeals have been “entirely opposite to the spirit of ‘better regulation’ and contrary to recommendations of a review of the appeals process…. (that) recommended a separate body to the ACT should be formed since there was wide spread feeling that the ACT review process had been frankly too legal and too one sided.

“But this was not adopted by the SCER and we have ended up with the dogs breakfast served up by the appeal outcome,” Leitch wrote.

Meanwhile, in South Australia, the state government – which has itself has faced heavy criticism for the state’s high electricity prices – says “enough is enough.”

“There is a reason why two independent national bodies have found that SAPN should not be allowed to charge South Australians more and that is because the increases they are seeking are not justified,” said Minister Koutsantonis in a statement on Monday.

“That’s why I intervened in the appeal process to make a submission to the Australian Competition Tribunal, and it’s why I will be seeking legal advice on what avenues are available make representations to the Federal Court on behalf of South Australians.

“SAPN are doing what all monopolies do – attempting to charge customers as much as they possibly can. This move by SAPN is yet another indictment of the decision by Rob Lucas and the Liberals to privatise ETSA in 1999.

“That decision locked in high prices and now we have to fight tooth and nail to prevent these companies from slugging South Australians with unreasonably high charges.”

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5 Comments
  1. DevMac 3 years ago

    If we disregard the issue of privatisation of power networks and its effect on consumer power prices (the evidence isn’t conclusive), it’s looking as if it could be conclusive that privatisation of power networks is causing expensive legal issues surrounding regulation.

    If the regulator makes a decision that the power company doesn’t like, then the power company will likely contest it in court. If they lose in court, they’ll contest in the next court until they reach the top court and either win or lose. If the Regulator loses (at any of the court levels), they’ll accept it and move on (won’t they?). Does this mean that the power companies are more likely to get their own way in the end?

    It’s a long game, but if the Regulator can be taken to court for doing its job then it looks as if taxpayers will lose either way. Doubly so if the power company wins:

    1. Taxpayers foot the legal bill
    2. Consumers pay more for power

    Privatisation isn’t just selling an asset, it’s selling control.

    • solarguy 3 years ago

      Hell I couldn’t agree more. The Regulators decision should be final, unless shown to be illegal on a point of law.

  2. MaxG 3 years ago

    With the risk of repeating myself: private utilities should have never been sold. Any government which does this should be put out of business.

    • Brunel 3 years ago

      The state governments should buy back the airports and electricity grid.

      Both are rip offs.

    • Coley 3 years ago

      Privatisation, in the name of ‘enhanced competition for the benefit of consumers’ was always a case of Neo liberal cronyism taking the pi$$ out of Joe public.
      We pay more, they pick up the profits, we pick up the costs of the remedial work they leave behind.
      Here in the U.K. We have a system where private companies run the rail services but the public pays for the upkeep of the infrastructure, you honestly couldn’t make it up!

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