Overview
The Australian Energy Regulator (AER) has released its final determinations on the Victorian f-factor scheme for the 2016–2020 regulatory period.
Background
On 22 December 2016, the Victorian Government published the “f-factor scheme order 2016”. This Order revokes the previous f-factor scheme Order that commenced on 23 June 2011, under which the old f-factor scheme applied, and provides for the establishment of a new f-factor scheme. This new scheme establishes a new incentive mechanism that targets incentives towards fire ignitions that pose the greatest risk of harm through the use of ignition risk units (IRUs).
Under an Order-in-Council made by the Victorian Government, the AER must make various determinations under the f-factor scheme. These include:
- the AER is required to make, no later than 30 September 2018, an f-factor scheme determination to take effect in the 2016–20 period
- the f-factor scheme determination must establish an f-factor scheme, which complies with the Order and under which there is a revenue adjustment for a distributor.
In the 2016-20 distribution determination, we made the final decision on the application of the f-factor scheme based on the information available to us at the time (under attachment 18). The Victorian Government has now published a new Order, revoking the previous scheme. Under the new Order we are required to make a new f-factor scheme determination by 30 September 2018 which will replace the f-factor scheme determination contained in our Final Decision for Victorian distributors 2016 to 2020, Attachment 18 – f-factor scheme, May 2016.