Note This attachment forms part of the AER's preliminary decision on SA Power Networks' 2015–20 distribution determination. It should be read with all other parts of the preliminary decision. The preliminary decision includes the following documents: Overview Attachment 1 – Annual revenue requirement Attachment 2 – Regulatory asset base Attachment 3 – Rate of return Attachment 4 – Value of imputation credits Attachment 5 – Regulatory depreciation Attachment 6 – Capital expenditure Attachment 7 – Operating expenditure Attachment 8 – Corporate income tax Attachment 9 – Efficiency benefit sharing scheme Attachment 10 – Capital expenditure sharing scheme Attachment 11 – Service target performance incentive scheme Attachment 12 – Demand management incentive scheme Attachment 13 – Classification of services Attachment 14 – Control mechanism Attachment 15 – Pass through events Attachment 16 – Alternative control services Attachment 17 – Negotiated services framework and criteria Attachment 18 – Connection policy
review of SA Power Networks' demand forecasts and forecast network utilisation from our augex model. We also accept the proposed $52.7 million to remediate quality issues across its network. However, we do not consider that SA Power Networks has provided sufficient evidence to demonstrate it will be unable to maintain power quality levels, within the 2015-20 period, without an additional $19.6 million to invest in network monitoring. Safety 307.8 21.1 We do not accept the proposed $212.5 million for bushfire mitigation and $74.2 million for road safety. We acknowledge SA Power Networks' initiatives to review its current practices and procedures for network safety, and its efforts to engage with its customers. However, we are not satisfied that these programs are reflective of the efficient costs that a prudent operator would require to maintain the safety of the distribution system. Strategic projects 92.9 45.2 We accept the proposed $45.2 million for the strategic project to install a second cable to Kangaroo Island. However, we do not accept the proposed strategic projects of $15.4 million to install network monitoring in select smart metres and $24.7 million for network control. Reliability 56.4 27 We accept the proposed $27 million to maintain network reliability. However, we do not accept the additional $29.4 million to improve network reliability. We are not satisfied based on the information provided by SA Power Networks that the STPIS regime will not fund these programs over the 2015-20 period. Environmental 14.9 14.9 We accept the proposed $14.9 million for environmental capex because we are satisfied that these amounts reasonably reflect the efficient cost to comply with the applicable regulatory obligations. Other — PLEC 44.3 44.3 We accept the proposed $44.3 million to underground power lines as part of the Power Line Environment Committee (PLEC) program because we are satisfied that these amounts reasonably reflect the efficient cost to comply with the applicable regulatory obligations. Total 839.4 463.6 Source: AER analysis, SA Power Networks' reset RIN, SA Power Networks' response to AER SAPN 005 Note: The combined total of each augex component is $848 million, rather than $839.4 million as set out in this table. As set out in Table 66, we allocated the superannuation capex item within SA Power Networks' reset