PIAC responded to DirectLink’s revenue proposal for 2020 to 2025. PIAC contends that efficiency and consumer preferences should be central drivers of decisions by the businesses and the AER.
We consider we cannot support DirectLink’s proposed revenue allowance or Regulated Asset Base (RAB) as both represent an increase on its 2015-20 proposal. This increase would be passed onto consumers, worsening affordability.
We consider the AER should also employ a ‘top down’ view of proposals, where investment is constrained by what consumers are willing to pay for, not just which projects are efficient in and of themselves.
We highlight that DirectLink’s consumer engagement prior to lodging its revenue proposal was unacceptable – being very late and insufficient. This is counter to putting consumer preferences at the centre of such proposals. We make recommendations for DirectLink to improve their engagement moving forward.