The Australian Energy Regulator (AER) yesterday released its draft determination on the costs that Queensland electricity distributors Energex and Ergon Energy will be able to recover for the provision of electricity distribution services over the period from 1 July 2010 to 30 June 2015. Electricity distributors charge fees to your energy retailer to deliver electricity to your home or business premises – these fees are passed on to end consumers and businesses in the form of higher electricity supply charges and usage charges.

Households and businesses in Ergon Energy’s network area (regional and rural Qld) will see an increase in network charges of 26 per cent in the first year followed by 4 per cent in the four years to 30 June 2015. Those living in Energex’s network area (South-east Queensland), will see increases of 21 per cent in 2010/11, followed by 6 per cent increases over the remaining four years.

The AER states that network charges represent roughly 40 per cent of the power bills paid by consumers, meaning that the average residential customer in Queensland would see annual electricity bills rising by $133 (around 9 per cent) in 2010-11 and by around $31 (approx. 2 per cent) each year thereafter.

The reasons for the AER’s decision to approve such hefty increases relate to increased investment required to support both a growing population and increases in peak demand. Apparently over the past 12 years Queensland’s population has swelled by 33 per cent whilst peak demand has exploded by 99 per cent.

You can read the AER draft determination here. Interested parties are invited to provide written submissions on the AER’s draft determinations and the Queensland electricity distributors’ revised regulatory proposals by 16 February 2010.