NSW Electricity Network Reforms
There are currently three electricity networks – more commonly known as the ‘poles and wires’ - responsible for the distribution of electricity to homes and businesses.
To help contain the rising costs of delivering electricity, the NSW Government will merge the three distribution networks into a single corporate structure to reduce waste and duplication and generate savings from economies of scale.
A new State owned corporation (SOC) will be created to own and operate the electricity distribution network. Three subsidiary businesses – Ausgrid, Endeavour Energy and Essential Energy – will provide operational services to the SOC under the current brands.
It is expected the reform will deliver in excess of $400 million in efficiency savings over four years, which will be used to fund electricity bill rebates for low income households and families. These reforms will also place downward pressure on electricity prices in future years.
How will the reforms achieve cost and efficiency savings?
The cost of distributing electricity, or ‘network costs’, account for more than half of household electricity bills. The Government’s reform aims to reduce these network costs by streamlining decision making and optimising value across the three networks. The new model aims to reduce the duplication of corporate services and overheads, standardise IT and network management and deliver economies of scale in purchasing (i.e. make savings by buying in bulk).
How was this new model for the electricity distribution network developed?
A Task Force consisting of Government agencies, supported by a Panel made up of industry and commercial experts, recommended reform options after a six month analysis.
The Task Force undertook a detailed cost-benefit analysis for rationalising the three existing networks with a view to maximising cost and efficiency savings. It assessed the resulting options against a number of criteria including their potential impact on employment in regional communities and their relative ability to guarantee the reliable, safe and secure supply of electricity.
How will the reforms be implemented?
Implementation of the reforms will commence immediately and the reforms will be finalised as soon as possible. During the transition phase, the existing businesses will continue to operate in a business-as-usual mode.
What does it mean for employees of the three existing network companies?
Executive management and some corporate support functions will be streamlined. However no reduction of frontline staff is expected. Award staff will continue to be employed under their current arrangements and no depots are earmarked for closure.
How is the NSW Government assisting households with rising energy costs otherwise?
The NSW Government currently has a range of assistance measures to help households with their energy costs.
A new $200 Low Income Household Rebate was introduced from 1 July 2011. This will rise to $235 by 2014.
Other assistance measures include:
- Medical Energy Rebate ($200 a year from July 2011);
- Life Support Rebate (rates vary depending on type of machine);
- Energy Accounts Payment Assistance (EAPA) vouchers;
- Home Power Savings Program (up to 20% savings on electricity use); and
- Retailer Hardship Policies and Payment Plans.
Centrepay is also available to help people manage the impact of large energy bills by making regular instalments.
For information on electricity rebates and EAPA assistance, contact your electricity retailer or call the Energy Information Line on 1300 136 888.