AER releases Victorian gas network performance report

The Australian Energy Regulator has issued its report on the performance in 2012 of providers of distribution services for gas in Victoria. The businesses covered in the report are Envestra, Multinet and SP AusNet.

“If the current level of reliability continues, customers can expect an outage on average only once every 36 years,” AER Chairman Andrew Reeves said.

The Victorian service providers deliver gas through low pressure pipelines directly connected to a customer’s premises. Distribution network charges generally make up about 40-60 per cent of a household customer’s bill.

The performance report provides information on the financial performance, reliability and customer service outcomes of Victorian distribution networks managed by the businesses. The report benchmarks against performance targets. This allows for informed public input into the AER's decision making and ensures accountability for performance outcomes.

Mr Reeves said that the report highlighted some key trends over the past five year period in performance for the Victorian businesses.
“The reliability of the networks is similar to the ten year average of one interruption every four decades.”

The return on assets owned by the businesses has increased, assisted by modest increases in the quantity of gas delivered through the pipelines and colder weather in some years.

“Despite delivering high reliability levels, all gas businesses spent less on capital expenditure than the amount that had been funded by customers from the 2008 determination made by the Victorian regulator.”

This was principally due to these businesses spending less than the target levels of replacement expenditure for old parts of the network and a cautious approach to funding projects due to the credit crunch post 2008.

“The AER took over responsibility for setting Victorian gas distribution network charges in 2013. To address the issue of under-spending and to avoid the risk that customers pay twice for the same work, the AER has tightened the allowances provided so that from 2013 business will recover no more than the efficient costs of providing the services,” Mr Reeves said.

This is the last performance report we will publish that relates to the previous state regulatory regime. From now, we will publish data on all of the gas distributors in the Australian market. This will assist customers to compare their network’s performance with those in other states.”

Issued date: 
6 February 2014
AER reference: 
NR 003/14
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