Five months ago, before the state election, transmission authority Powerlink released its 2023-2027 revenue proposal for feedback from customers and stakeholders. The cost of running Powerlink’s transmission grid accounts for almost 10 per cent of every household power bill, and executives wanted to take a cautious approach to setting the budget.
At the time, Powerlink proposed a 12 per cent increase in capital expenditure, expecting to spend $988.9 million on the network over a four-year period. Some work had already been delayed by COVID-19 restrictions but the main cost pressure was the need to clear more ground around high-voltage powerlines and replace a section near Cairns.
However, the proposal came as a shock to some, with Powerlink now reporting that “customers provided feedback that this increase was a serious concern”. The pandemic had sparked a recession and put household and business expenses in a new light.
In response, Powerlink has issued a revised proposal – a three per cent reduction in capital expenditure, combined with a target of no real growth in operating expenditure.
“The adoption of this approach represented a significant shift for our business during the development of our revenue proposal and it will be a challenge for us to meet this stretch target,” Powerlink said.
“However, on balance, we considered that we should rise to this challenge in the interests of customers and continue to drive our business hard to find further efficiencies and productivity improvements to become a world-class transmission network service provider.”
Powerlink is now hoping to deliver households an average saving of $13 in 2022-23, and small businesses a $23 benefit, however it comes with the risk of cost blowouts, in an already volatile and disrupted market, and will put the network under increasing strain.
A similar approach to running the distribution network led to widespread blackouts under the Beattie government. A subsequent review found the network was being worked too hard, without the maintenance and infrastructure upgrades needed to provide a reliable supply. The upgrades and investment that followed contributed to claims Australia’s power network was ‘gold-plated’ and brought pressure on governments to again cut costs for consumers.
As reported by InQueensland this week, the move to renewable energy has also caused significant disruption and led to concerns over reliability and security of supply. Powerlink noted that crews were sometimes being denied the flexibility of planned shutdowns, having to perform repairs and maintenance “in proximity to live electrical equipment to limit impact on the reliability and security of the network”.
The Australian Energy Regulator will prepare a discussion paper and call for comments on Powerlink’s revised proposal.Jump to next article