On 23 June 2011, the Victorian Government introduced an ‘f-factor scheme’ This scheme is intended to provide incentives for Distribution Network Service Providers (DNSPs) to reduce the risk of fire starts and to reduce the risk of loss or damage caused by fire starts.
The f-factor scheme provides a financial incentive for DNSPs to reduce the number of fire starts in their distribution networks. For the first four years (2012–15), DNSPs will be either rewarded or penalised at the incentive rate of $25,000 per fire for performing better or worse than their respective fire start targets.
Under an Order-in-Council made by the Victorian Government, the AER must make various determinations under the f-factor scheme. These include:
- by no later than 31 December 2011, an f-factor scheme determination to set the fire start targets for each of the DNSPs to take effect for the 2012–15 period – the targets should be based on the average historical fire starts of the DNSPs over the five previous calendar years.
- f-factor amount determinations to set the amounts of the cost pass throughs under the f-factor scheme for each year’s operation of the scheme of each DNSP—these determinations must be made by no later than 30 September of the following year—the first one being in 2013.