Revenue Our 2010 distribution determination applied a weighted average cap (WAPC) form of control to SA Power Networks’ distribution services over the 2010–15 regulatory control period. A WAPC imposes controls over the prices a DNSP may charge for its services. SA Power Networks' total revenue recovered for standard control services over the first three years of the 2010–15 regulatory control period was approximately 6 per cent higher than our approved forecast (Figure 9–67). SA Power Networks indicated the weather in the first three years of the 2010–15 regulatory control period impacted on its actual revenue being higher than our approved forecasts. SA Power Networks estimated the possible incremental impacts associated with customer response to weather represent $15.6 million of revenue. It also indicated other variations would account for the estimated balance of $34.7 million, which is approximately 1.6 per cent of the amended AER forecast for the period. Chapter 7 provides further information on the WAPC control mechanism as well as our comparative assessment of revenue for all DNSPs in the NEM. Figure 9–67 Revenue – SA Power Networks Financial performance SA Networks' average EBIT for standard control services was approximately 43 per cent of its total revenue earned for standard control services over 2010–13. The EBIT in Figure 9–68 includes depreciation and amortisation and should not be used as a definitive measure of core profitability. For SA Power Networks EBIT margin is shown as EBIT divided by both gross and net revenue, reflecting different treatment of revenues received and expenditures made for transmission services (TUoS revenue). Gross EBIT margin (including TUoS revenue) is consistent with reporting in the 2012–13 Annual Reporting RIN and SA Power Networks' statutory financial accounts. Figure 9–68 Earnings before interest and tax– SA Power Networks SA Power Networks indicated its EBIT margin increased in the 2010–15 regulatory control period due to additional revenue from: higher capital allowances which were approved by us: additional EBIT is required to service increased levels of debt and investment higher WACC which was approved by us due to the higher cost of funds in the financial crisis environment additional allowed revenues starting from 2011–12 for outcomes from the Tribunal decision following our 2010 distribution determination, noting five of this additional revenue is being recovered over the final four years of the regulatory control period
Capital expenditure AusNet Services' capital expenditure over the first three years of the 2011–15 regulatory control period was approximately 2 per cent lower than our approved forecast (Figure 9–83). Figure 9–83 Capital expenditure (excluding customer contributions) – AusNet Services AusNet Services indicated its capital expenditure was less than forecast in 2011 due to lower spending on demand related categories including reinforcement and customer connections (Figure 9–84). Figure 9–84 Capital expenditure by purpose (excluding customer contributions) – AusNet Services Chapter 5 provides a description of how DNSPs fund their expenditure on investment projects (capital expenditure) and a comparative assessment of capital expenditure for all DNSPs in the NEM. Regulatory asset base AusNet Services' RAB increased by approximately 25 per cent over the first three years of the 2011–15 regulatory control period. AusNet Services' RAB was forecast to increase by 43 per cent over this period. AusNet Services' RAB grew from approximately $2.2 billion at the end of 2010 to approximately $2.7 billion at the end of 2013 (Figure 9–85). The marginal difference between the forecast and actual value of AusNet Services' RAB is consistent with its marginal underspending on capital over the first three years of the regulatory control period. Figure 9–85 Regulatory asset base – AusNet Services Operating expenditure AusNet Services' operating expenditure over the first three years of the 2011–15 regulatory control period was approximately 4 per cent lower than our approved forecast (Figure 9–86). AusNet Services indicated underspending on actual operating expenditure in 2011 and 2012 was primarily driven by efficiencies in maintenance spend. Chapter 6 contains our assessment of operating expenditure for all in the NEM.