ActewAGL plans 'substantial' job cuts in the wake of a decision by the Australian Energy Regulator

The energy regulator says ActewAGL is inefficient and could be running its distribution network at much lower costs without compromising safety and reliability. Inefficiencies should be borne by shareholders, not consumers, the regulator said in a decision on Thursday, cutting ActewAGL's operating expenditure allowance from the $371 million it wanted, to $240 million.

Mr Costello said that left ActewAGL with $48 million a year over five years, a shortfall of $26 million a year. I

Reliability of the city's electricity supply would suffer.

"When you've got a lot fewer people and a lot fewer funds to operate and maintain a network, there will be not only more blackouts and brownouts, but when they happen they'll take longer to put back on," he said.

"It's just another kick for Canberra, job losses, less reliable energy supply, longer to respond to people's legitimate energy needs. It's just an unhappy story."

Mr Costello dismissed the regulator's suggestion that ActewAGL was inefficient as "a load of rubbish".

And while the decision on capital spending was an improvement on the previous proposal, it meant the Molonglo substation could no longer be built.

The regulator has shifted slightly from its draft decision, which would have cut another $4 million from operating spending a year and forced bigger cuts to capital spending.

Its decision said ActewAGL had proposed to recover more revenue from customers than necessary, and said while ActewAGL's revenue per residential customer might be among the lowest nationally, it's non-residential revenue per customer was among the highest. It received almost two-thirds of revenue from non-residential customers, even though they made up only nine per cent of customers. It's operating expenditure per customer was higher than average.

ActewAGL should be one of the better performing networks on reliability because of its large proportion of underground assets and urban feeders, but was one of the poorer performing networks on planned outages, it said.

The decision allows ActewAGL a rate of return of 6.48 per cent, instead of the 8.99 per cent requested, and the regulator said it was satisfied the decision would not risk insolvency.

"This is a small saving compared to the major impact the cuts will have on the reliability and security of the ACT electricity distribution network," he said. "Our customers have consistently told us they don't want lower prices if this means lower levels of service and electricity supply reliability."

an overwhelming focus on price rather than quality.

"A consequence, particularly if the job cuts do occur in the number that has been bandied about, is that the Canberra community can look forward to a less reliable service, with brownouts more likely to occur," he said, with the union urging the ACT government and ActewAGL to find ways to avoid the job cuts.