Having considered submissions received through public consultation, our final determination regarding 2014 fire start outcomes confirms the position adopted within our draft determination published on 24 June 2015. This fire start outcome of 2014 will apply to 2016 network tariffs.
Under this determination (see table below), all Victorian electricity distributors, except AusNet Services, will receive a penalty because there were more fire starts than the respective benchmark targets. The penalties range from $15 000 for CitiPower to $2 245 000 for United Energy. AusNet Services will receive a $1 870 000 reward as its fire start number was below its benchmark target.
The f-factor is an incentive scheme. Victorian electricity distributors can only retain their rewards for sustained and continuous improvements by mitigating the number of fire starts. Once improvements are made, the benchmark fire start targets will be tightened in future years.
|Distributors||Adjustment (Pass through amount) ($)||Approximate charge ($) per customer (p.a.)|
|Powercor||(1 530 000)||(2.02)|
|AusNet Services||1 870 000||2.79|
|United Energy||(2 245 000)||(3.43)|
Numbers in brackets represent more fire starts than the benchmark targets, resulting in negative adjustment to the allowable revenue and reduction in network charges.
On 24 June 2010, the Victorian Parliament passed the Energy and Resources Legislation Amendment Act 2010. The Act amended the National Electricity (Victoria) Act 2005 (the NEVA) to introduce an 'f-factor scheme'. Subsequently, the Victorian Government published the f-factor scheme order 2011 (the Order) on 23 June 2011 under the NEVA. The scheme provides incentives for Distribution Network Service Providers (distributors) to reduce the risk of fire starts due to electricity infrastructure, and to reduce the risk of loss or damage caused by fire starts. The Order prescribes that, for the first four years of the scheme (2012-15), distributors will be either rewarded or penalised at the pre-determined incentive rate of $25,000 per fire for performing better or worse than their respective targets.
On 22 December 2011, we made our f-factor scheme final determination. This set the fire start benchmark target for each Victorian distributor. As required by the Order, the targets were based on the average of historical fire starts of each distributor over the five previous calendar years-that is, the average of 2006-10.
The Order also requires us to publish a draft "f-factor amount determination" for consultation before determining the final reward or penalty amounts each year.