Table 2.11 AER’s final decision cash flow analysis for ElectraNet's benchmark equity raising costs ($ million, nominal) Cash flow analysis Total Notes Dividends 195.6 Set to distribute imputation credits assumed in the PTRM (100 per cent). Dividends reinvested 58.7 Availability of reinvested dividends, capped at 30% dividends paid. funding requirement 736.6 Forecast capex funding requirement (including half year WACC adjustment). Debt component 330.2 Set to 60% of annual change in RAB. Equity component 406.4 Residual of capex funding requirement and debt component. Retained cash flow available for reinvestment 367.6 Exclude dividends reinvested. Equity required 38.8 Equals equity component less retained cash flows. Source: AER analysis.
Table 2.12 AER’s final decision cash flow analysis for ElectraNet's benchmark equity raising costs ($ million, 2012–13) Cash flow analysis Total Notes Equity component 378.9 Residual of capex funding requirement and debt component. Retained cash flow available for reinvestment 340.6 Exclude dividends reinvested. Equity required 38.3 Equals equity component less retained cash flows. Dividends reinvested 54.4 Availability of reinvested dividends, capped at 30% dividends paid. Dividend reinvestment plan required 38.3 Required reinvested dividends. Seasoned equity offerings required 0.0 Required season equity offerings (SEOs). Cost of dividend investment plan 0.4 Required reinvested dividends multiplied by benchmark cost (1%). Cost of season equity offerings 0.0 Required SEOs multiplied by benchmark cost (3%). equity raising costs 0.4 Total costs of dividend reinvestment plan and SEOs. To be added to RAB at the start of the regulatory control period. Source: AER analysis. Components of ElectraNet's revised capex proposal that the AER accepts We accept the categories of ElectraNet's revised forecast in table 2.13 reasonably reflect the efficient and prudent costs of a TNSP. Table 2.13 sets out the categories and accepted values. Table 2.13 Components of ElectraNet's capex proposal that the AER accepts ($ million, 2012–13) Project category Sub-category $ million, 2012–13 NETWORK Load driven Augmentation 87.1 Connection 86.9 Nonload driven Security/compliance 64.9 Inventory/spares 18.6 NONNETWORK Business IT 45.8 Buildings/facilities 5.6 Source: AER analysis. Numbers may not be the same as ElectraNet's proposal due to our final decision on cost estimation risk factors and real cost escalation. We accept that ElectraNet's revised proposed forecast augmentation and connection reasonably reflect a realistic expectation of the demand forecast and cost inputs required to meet the capex objectives. ElectraNet's revised proposed augmentation and connection capex is a $74.4 million ($2012–13) reduction of
Negotiated transmission service criteria This section reproduces the NTSC specified in our draft decision. In accordance with our final decision, it is the NTSC that will apply to ElectraNet for the 2013–18 regulatory control period. National Electricity Objective The terms and conditions of access for a negotiated transmission service, including the price that is to be charged for the provision of that service and any access charges, should promote the achievement of the national electricity objective. Criteria for and conditions of access and conditions of access The and conditions of access for a negotiated transmission service must be fair, reasonable, and consistent with the safe and reliable operation of the power system in accordance with the NER. The terms and conditions of access for negotiated transmission services, particularly any exclusions and limitations of liability and indemnities, must not be unreasonably onerous. Relevant considerations include the allocation of risk between the TNSP and the other party, the price for the negotiated transmission service and the cost to the TNSP of providing the negotiated service. The terms and conditions of access for a negotiated transmission service must take into account the need for the service to be provided in a manner that does not adversely affect the safe and reliable operation of the power system in accordance with the NER. Price of services The price of a negotiated transmission service must reflect the cost that the TNSP has incurred or incurs in providing that service, and must be determined in accordance with the principles and policies set out in the Cost Allocation Methodology. Subject to criteria 7 and 8, the price for a negotiated transmission service must be at least equal to the avoided cost of providing that service but no more than the cost of providing it on a stand alone basis. If the negotiated transmission service is a shared transmission service that: exceeds any network performance requirements which it is required to meet under any relevant electricity legislation; or exceeds the network performance requirements set out in schedule 5.1a and 5.1 of the NER then the difference between the for that service and the price for the shared transmission service which meets network performance requirements must reflect the TNSP’s incremental cost of providing that service (as appropriate). For shared transmission services, the difference in price between a negotiated transmission service that does not meet or exceed network performance requirements and a service that meets those requirements should reflect the TNSP’s avoided costs. Schedule 5.1a and 5.1 of the NER or any relevant electricity legislation must be considered in determining whether any network service performance requirements have not been met or exceeded.