Note This attachment forms part of the AER's final decision on Energex's 2015–20 distribution determination. It should be read with all other parts of the final decision. The final 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
Alternative control services Alternative control services are services provided by distributors to specific customers. They do not form part of the distribution use of system revenue allowance provided by us to each distributor. Rather, distributors recover the costs of providing alternative control services through a selection of prices with most charged on a ‘user pays’ basis. In this attachment, we set out our final determination on the prices Energex is allowed to charge customers for the provision of ancillary network services, metering, and public lighting. The approved prices are set out at appendix A. Public Lighting Final decision We do not approve Energex's proposed public lighting charges because we have determined: a nominal post-tax weighted average cost of capital (WACC) of 6.01 per cent instead of the proposed 7.42 per cent imputation credit assumption of 40 per cent instead of the proposed 25 per cent. This final decision adopts the same estimate of WACC as for standard control services. The reasons for the nominal post-tax WACC and imputation credit assumption are discussed in attachment 3 — Rate of return. In all other respects we have approved Energex's proposal. Final decision prices for each light type are set out in table 16.1. Table 16.1 Final decision prices for public lights, $ day 2015—16 2016—17 2017—18 2018—19 2019—20 Major public lights non-contributed 0.78 0.80 0.82 0.84 0.87 Major public lights contributed 0.27 0.28 0.29 0.29 0.30 Minor public lights non-contributed 0.36 0.37 0.38 0.39 0.40 Minor public lights contributed 0.13 0.13 0.14 0.14 0.15 Source: AER analysis.
Table 16.14 Material cost adjustments ($2015–16) Initial proposal Revised proposal Marsden Jacob maximum Final decision On-costs ($2015–16) per meter Single phase - one element 15.17 15.17 25.64 15.17 Single phase - two element 17.51 17.45 25.64 17.51 Multi phase (DC) 24.90 24.90 25.64 24.90 Multi phase (CT) - 2 man crew 61.49 61.49 Not assessed 61.49 Capital allowance per meter Single phase - one element 23.99 35.11 Not assessed 35.11 Single phase - two element 23.99 35.11 Not assessed 35.11 Multi phase (DC) 31.66 46.35 Not assessed 46.35 Multi phase (CT) - 2 man crew 63.32 92.70 Not assessed 92.70 Source: Energex, Revised regulatory proposal: Attachment 6 – Metering indicative prices, July 2015, "Upfront charges" tab; Marsden Jacob Associates, Consultant report to the AER on Alternative Control Services, October 2014, p. 33. Table 16.15 Labour cost adjustments (percentage) Initial proposal Revised proposal Marsden Jacob maximum Final decision On-costs Fleet on-costs 12.60 11.2 Not assessed 11.2 Overheads General overhead 44.10 43.31 - 43.31 Corporate support overhead Not proposed 7.57 - 7.57 Total (overheads) 44.10 50.88 59.0 50.88