Annual Report 2018-19

Current year financial review

Our primary fiscal objective is to minimise our costs to government and our fee-paying industries while maintaining our effectiveness and delivering a high quality of services. 

In 2018–19, the commission achieved an operating surplus of $1.660 million, $1.370 million higher than in 2017–18. A summary of our financial performance is outlined below and shows the movements in actual income, expenses, balance sheet items and net cash flow.

Our finances in 2018–19

Our financial position remains strong with total assets of $19.21 million, total liabilities of $5.38 million and total net assets of $13.83 million.

$1.66 million surplus – We recorded an operating surplus of $1.66 million in 2018–19 compared to $0.29 million in 2017–18.

40% in flexible work – Over 40 per cent of our employees had formal flexible work agreements to suit their personal commitments.

Financial summary 2018–19 and previous 4 years

Comprehensive operating statement	2018–19	2017–18	2016–17	2015–16	2014–15
Total income from transactions	25,349,539	24,316,269	23,948,697	19,599,126	15,956,224
Total expenses from transactions	23,554,425	24,029,804	21,769,240	18,351,057	15,536,460
Net result from transactions	1,795,113	286,465	2,179,457	1,248,069	419,764
Comprehensive result	1,660,295	290,004	2,113,707	1,186,283	407,506
Balance sheet
Total assets	19,211,562	17,546,737	16,689,963	13,815,973	12,879,451
Total liabilities	5,380,733	5,376,203	4,809,434	4,049,151	4,298,912
Net assets	13,830,829	12,170,534	11,880,529	9,766,822	8,580,539
Cash flow
Net cash flow from operating activities	180,329	33,565	13,271	14,047	24,101

Assets and liabilities

Our financial position remains strong with total assets of $19.2 million, total liabilities of $5.3 million and net assets of $13.8 million. Significantly, our working capital is sufficient to fund our operations over the forward estimates period.

Net assets as a percentage of total assets

	2018–19	2017–18	2016–17	2015–16	2014–15
Net assets	71.99%	69.36%	71.60%	70.69%	66.62%

Our major asset is the receivable from the Victorian Government. This amount includes previously applied parliamentary appropriations that we have not yet drawn on. The balance represents the accumulated surplus (which can only be drawn down on after the approval of the Treasurer), accrued employee entitlements, payables and accumulated depreciation. The balance, net of the accumulated surplus, represent funding for commitments incurred through the appropriations and are drawn from the consolidated fund as the commitments fall due.

Total liabilities remained stable at $5.4 million. Our major liabilities are accounts payable and employee provisions.

Surplus/deficit

We operate in a fiscally responsible and sustainable manner, managing to the funding provided by government with a surplus each year, at an average of 5% per year, to increase reserves to fund future projects. Any application to prior years surpluses are subject to approval by the Treasurer.

Income

We are funded through parliamentary appropriations via the Department of Treasury and Finance.
Our total revenue has increased over the past five years (60 per cent since 2014–15) as a result of an increase in regulatory functions (for example, the introduction of the Fair Go Rates system, and expanded customer protection responsibilities in energy) and the expansion of the Victorian Energy Upgrades program.

Expenses

We incurred $23.6 million in expenses from transactions for the reported financial year. There was a small reduction in expenditure this year which was largely related to the one-off spike in expenditure in 2017–18 on the five-yearly water price review.

Our expenditure has increased over the last 5 years in line with our income as a direct result of additional initiatives and increased regulatory requirements imposed by government. 

Administered revenue

We also collect administered revenue on behalf the State of Victoria. This revenue is paid into Department of Treasury and Finance’s consolidated fund. The revenue includes licence fees and penalties for the regulation of the energy and water industries. It also includes fees for the Victorian Energy Upgrade program as well as any penalties relating to that program. We collected $17.4 million administered revenue in 2018–19 compared to $15.8 million in 2017–18.

The year ahead

We were allocated additional funding totalling $27.3 million over the next four years in the 2019–20 State Budget. This funding will allow us to deliver on the Government’s Energy Fairness Plan through reforms to pricing and marketing practices, and the strengthening of the commission’s enforcement powers. This will include the implementation of the Victorian Default Offer, and new requirements for energy retailers in billing, marketing and contract terms and conditions. In addition, our enforcement and investigative powers will be strengthened to improve the effectiveness in our monitoring of energy markets and retailers. 

For 2019–20, this will mean an increase in appropriation funding from $25.0 million to $30.0 million and a proportionate increase in staff numbers as we position ourselves to deliver the Energy Fairness Plan.