Values of Customer Reliability adjusted for 2020

In December 2019, the Australian Energy Regulator (AER) has released the Values of Customer Reliability (VCR) that outlined the dollar value customers in the National Electricity Market and Northern Territory place on energy reliability for outages lasting up to 12 hours.

The AER has adjusted the 2019 values to 2020 values based on a Consumer Price Index (CPI) increase of 0.69 per cent.

Network businesses, market operators and regulators that are required to apply VCRs should adopt the 2020 values in any relevant application from 18 December 2020.

Adopting the latest VCR will enhance consistency in how inflation that has occurred since the 2019 VCR Review is taken to account.

Background

The NER Rules 8.12(b) and 8.12(g) which required the AER to develop a methodology to determine VCRs, also required that the methodology included a mechanism for adjusting the VCRs on an annual basis.

The methodology underwent an extensive consultation process that began in October 2018. The annual adjustment mechanism is based on yearly movements in the September quarter CPI and is set out in the final decision on methodology.

Annual CPI adjustments to the VCR based on this methodology will continue until the next VCR review due by 31 December 2024.

Sector: 
Issued date: 
18 December 2020
AER reference: 
AC 174/20
Contact: 
AER General Inquiries AERInquiry@aer.gov.au