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Strong Advocacy Delivers Big $7.1 Million Street Lighting Savings to Tasmanian Councils

June 2019

This is hot off the press from the Local Government Association of Tasmania (LGAT's) monthly newsletter, The Pulse, where advocacy to the Australian Energy Regulator (AER) has seen a $7.1 million saving for Tasmanian councils! This is a significant win for LGAT members. From the Pulse:

LGAT has strongly advocated for members in the energy sector for the past few years, with a particular focus this year on TasNetworks’ 2019 pricing reset for the 2019-24 process with the Australian Energy Regulator (AER).

This advocacy work was well worth it, with the recent decision of the AER to reject TasNetworks’ pricing proposal for public lighting. The determination of the AER has put caps on TasNetworks’ overhead costs and has recommended that TasNetworks work with LGAT to develop a service level agreement with members around public lighting.

TasNetworks is a monopoly provider of transmission and distribution network services in Tasmania. The maximum amount of revenue TasNetworks is able to earn from its customers each year is set by the AER. This regulation exists primarily to protect electricity customers by ensuring specific performance standards are in place and by capping revenues based on expected costs forecast during a regulatory period (usually five years). 

As part of the lengthy consultation process associated with the pricing reset, LGAT interrogated TasNetworks pricing models, engaged with the AER and the consumer advocacy panel, and had numerous conversations with TasNetworks. The process included LGAT making two formal submissions. 

LGAT’s advocacy work has resulted in significant savings to councils. TasNetworks’ original January 2018 submission identified the revenue required over the 5-year period for public lighting to be $49.8 million.  Due to the significant impact of this price increase on councils, TasNetworks decided to forgo $12 million of this revenue, and proposed a revenue of $37.8 million over the period.  During the period of consultation on the pricing reset, TasNetworks reduced their pricing, however, the AER were not satisfied that TasNetworks had demonstrated that the increased costs were efficient.

The final determination handed down by the AER permitted TasNetworks to recover revenue of $30.7 million over the 5-year period, that is, $7.1 million less than TasNetworks originally proposal. LGAT is proud to deliver these significant saving to councils; a great outcome from the significant advocacy work LGAT has undertaken in collaboration with members throughout this process. 

We've worked with LGAT and Tasmanian councils on TasNetwork street lighting projects for years, including this current round of price review submissions. 

Congrats to the team at LGAT, this is a stunning outcome and shows how councils can save big with targeted, intelligent and strategic advocacy. 

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