The Australian Energy Regulator (AER) has cut the operating and capital expenditure allowances of the three electricity distribution businesses, Ausgrid, Endeavour Energy and Essential Energy.

Ausgrid's operating expenditure was cut by $170 million per year which represents a reduction of approximately 25 percent. Combined with a 15 percent reduction in capital expenditure of $550 million the result is an average saving of $165 per year to each of Ausgrid residential customers electricity bills.

These expenditure cuts require Ausgrid and the other business to reduce their costs and a primary component of operating expenditure is staff costs. Hence, Ausgrid like any prudent business is seeking to reduce these.

Ausgrid is consulting with its staff and their representative unions on these cost savings and it is not appropriate that I intervene in this consultation process.

While job losses are unfortunate and cause distress to the individual affected, I note that in the absence of other cost reductions, they are sometimes necessary to ensure New South Wales customers are not subject to unnecessarily high electricity bills.