AER - Values of Customer Reliability Review - Final decision - December 2019

On 18 December 2019 we released our final decision on the Values of Customer Reliability (VCR) review, setting out the VCR values for unplanned outages of up to 12 hours in duration (i.e. standard outages) for the National Electricity Market (NEM) and the Northern Territory.

Our final VCRs for standard outages are calculated in accordance with our methodology for deriving VCR values (published on 26 November 2019). Throughout the course of this review we consulted widely with governments, energy regulators, customer and industry representatives and customers themselves. Our final VCR values have been quality assured by the University of Melbourne’s Melbourne Energy Institute and our survey results were cross checked against calculations undertaken by KPMG.

Key findings

• While there are some differences between 2014 and 2019 in the VCR values for residential and business customers, in general VCR values are similar between the two years.
• Consistent with previous VCR studies we observe that business customer VCRs continue to be higher than residential customer VCRs.
• Residential customers continue to value reliability and have a preference to avoid longer outages, and outages which occur at peak times (defined as 7-10 AM and 5-8 PM). However, residential values are lower in 2019 than in 2014 with the exception of customers in suburban Adelaide.
• The 2019 VCR values are lower than the 2014 results for agricultural and commercial customers, and higher for industrial customers.
• The direct cost survey results show that VCR values amongst the approximately 300 business sites that consume the most energy in the NEM can vary greatly depending on sector.
• Overall, the NEM wide VCR is higher in comparison to 2014. This increase is primarily driven by industrial customers who consume a significant proportion of total energy.