AER amends AusNet REFCL spending to ensure consumers pay no more than necessary

The Australian Energy Regulator (AER) has today announced its decision on AusNet Services’ proposed spending on Tranche 3 of the installation of crucial bushfire safety technology.

Victorian distribution network businesses are obliged to install Rapid Earth Fault Current Limiters (REFCL) following recommendations from the 2009 Victorian Bushfires Royal Commission.

These businesses applied to the AER for contingent project funding as part of their 2016-20 revenue determinations to fulfill their REFCL obligations.

AusNet applied for $107.3 million in capital expenditure (capex) and $3.3 million of operating expenditure (opex) to meet its obligations for Tranche 3 of the project.

The AER has determined that spending of $94.4 million in capex and $0.03 million in opex is sufficient to meet the obligation in an efficient manner.

“We estimate that this decision will add 60 cents to the amount paid by AusNet’s residential customers for electricity, and $1.50 for business customers, in 2020.

“We have accepted most of AusNet’s proposal, but we believe that their proposed expenditure for additional capital works at Kalkallo is not cost-effective. Instead, we have approved a lower cost solution to meet the REFCL obligation in this area,” said AER Acting Chair Jim Cox.

AusNet’s contingent project application involves REFCL installation works at zone substations in: Benalla, Kalkallo, Lang Lang, Mansfield and Sale.

REFCLs can detect single phase-to-earth faults almost instantaneously and then cancel voltage on the affected line within milliseconds. This limits the voltage of the line to below the point where it can ignite a fire.

“We understand there has been serious community concern about cost blowouts on the REFCL project, and this is reflected in the submissions we have received on this contingent project and others.

“AusNet is required to install REFCL to meet its obligations under Victorian law. The AER has carefully examined AusNet’s proposed expenditure to ensure that consumers pay no more than necessary to meet this obligation,” said Mr. Cox.

The AER has previously released its decisions on AusNet Services’ proposed spending on Tranche 1 and 2 of the installation of REFCLs.

About the AER

The AER works to make all Australian energy consumers better off, now and in the future. 

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.

We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.

Issued date: 
3 October 2019
AER reference: 
NR 20/19
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