What customers told us & What we proposed

• Overall, our customers were overwhelmingly supportive of the inclusion of renewable gases into the network. They see renewable gases as offering choice for customers who do not have the flexibility to electrify due to practical, technical or affordability reasons.
• 90% of customers supported renewable gas connections for a 10% renewable gas blend by 2030.
• We proposed eight biomethane connection projects to our network in our Initial 2025 Plan.

AER Draft Decision

• The AER provided a placeholder value of $0 for our proposed biomethane projects.
• The AER has asked us to provide additional information about these proposed investments before giving its approval.
• It wants to better understand the economic benefits and project completion timelines

Our Revised 2025 Plan

• Responding to customers’ clear support, our Revised 2025 Plan maintains a $79 million investment in renewable gas connections.
• We've updated our analysis to respond to the AER’s concerns about the inputs and assumptions used in our business cases, and have provided further information to demonstrate that the projects provide net benefits to customers.
• Additionally, we've proposed a mechanism to return any revenue to customers if projects don't proceed during 2025-30.

What customers told us & What we proposed

• 94% of customer forum participants showed strong support for this initiative.
• Customers value Picarro as it allows us to proactively manage emissions, rather than simply purchasing carbon credits to meet our obligations to reduce emissions.
• In our Initial 2025 Plan, we proposed 8 Picarro units, to enable us to measure emissions from our entire network annually. This would allow us to effectively target and repair the largest methane leaks from our network.

The AER’s Draft Decision

• The AER rejected our proposal to purchase additional cars to deliver Picarro leak detection services (an opex step change of $20.8 million over the 2025-30 period)

Our Revised 2025 Plan

• We believe that Picarro is an important innovation as it will help ensure the ongoing safety of our ageing network and allow us better target and more effectively reduce our emissions.
• Our customers were also supportive of us using this technology to change our asset management approach, and to avoid purchasing carbon offsets.
• We have re-proposed this opex step change, although we have revised the number of cars associated with Picarro leak detection services, resulting in an opex step change of $15.3 million.

What customers told us & What we proposed

• Through a series of customer forums in 2023 through to 2024, we explored accelerated depreciation options ($300 - $700 million).
• The final customer forum strongly endorsed $300 million, with 98% support, acknowledging the balance between short-term and long-term bill stability.
• We proposed $300 million of accelerated depreciation in our Initial 2025 Proposal

AER Draft Decision

• The AER approved $156 million for accelerated depreciation.
• We welcome the AER’s decision to accept accelerated depreciation, but do not believe that this decision sufficiently acts upon the opportunity to reduce stranded asset risk whilst there remains a large customer base.

Our Revised 2025 Plan

• After submitting our Initial 2025 Plan, our Advisory Board recommended we further engage with customers, focusing solely on accelerated depreciation.
• We conducted comprehensive quantitative research with 1,006 JGN customers, which included two explanatory videos and a carefully tested survey to ensure clear understanding of the topic.
• This research shows that the majority of customers surveyed supported higher accelerated depreciation options and understood the trade-offs in terms of increasing prices in the short versus the long term. The survey results confirm the feedback that we received throughout our customer engagement program that customers are supportive of using accelerated depreciation to support smoother bills for customers over the long term.
• We revised our accelerated depreciation proposal to $230 million. Our decision aims to support the long-term interests of customers in an uncertain future and prevents unfair outcomes where early adopters of electrification are effectively subsidised by those who cannot switch due to financial or rental market constraints.