The AER has today published its determination on TasNetworks (Distribution)’s application to pass through costs incurred from the 26 August – 4 September 2024 storm in Tasmania.
The AER’s decision is to approve a cost pass through amount of $4.19 million ($nominal, smoothed) to be recovered in the last three years of the 2024–29 regulatory control period as follows:
- $1.06 million to be recovered in 2026–27
- $1.73 million to be recovered in 2027–28
- $1.40 million to be recovered in 2028–29.
The AER has determined that the August–September 2024 storm met the definition of a natural disaster pass through event, and that TasNetworks incurred materially higher costs as a result.
The increased costs incurred by TasNetworks include capital and operating expenditure required to restore distribution services, along with a post-incident review, which we consider to be prudent and efficient in the circumstances. However, we have excluded a portion of identified labour costs that we are not satisfied are incremental, reducing the pass through amount by $0.3 million ($June 2024).
On average, the estimated bill impact of this cost pass through for TasNetworks customers is an increase of approximately $3 for residential customers and $11 for small business customers per year over 2026–27 to 2028–29.
Background
Tasmania experienced a severe storm from 26 August to 4 September 2024, resulting in significant damage to overhead power lines, with fallen trees and poles across all regions of the state. This led to widespread power outages. In total, over 1,920 outages affected more than 221,000 customers, many of whom experienced multiple interruptions. Some remote and complex outages took up to 23 days to be restored.
Under the National Electricity Rules, the AER is required to assess cost pass through applications in relation to natural disaster events. The AER's role is to determine whether a positive or negative change event has occurred, and if so to determine the amount of prudent and efficient costs that should be passed through, to ensure consumers pay no more than necessary.