Type
Communications
Sector
Electricity
Segment
Distribution
Issue date
Contacts
General inquiries - Cost Pass Throughs

The Australian Energy Regulator (AER) is seeking submissions on cost pass through applications received from AusNet Services, Jemena, CitiPower, Powercor, United Energy, and Energex. These applications relate to incremental distribution network costs arising from various recent regulatory changes, as well as Tropical Cyclone Alfred in March 2025.

Flexible Trading Arrangements (FTA) rule change

The Victorian electricity distribution network service providers (AusNet, Jemena, CitiPower, Powercor, and United Energy) have submitted cost pass through applications seeking to recover costs arising from the Australian Energy Market Commission's (AEMC’s) Unlocking CER benefits through flexible trading arrangements rule change. 

The distribution network service providers have identified total incremental costs (capital and operating expenditure) as follows:

  • AusNet Services – $15.3 million
  • Jemena – $14.8 million
  • CitiPower – $13.3 million
  • Powercor – $31.1 million
  • United Energy – $41.4 million

Other regulatory changes

Jemena has also separately applied to pass through incremental costs arising from the Australian Energy Market Operator's (AEMO’s) Market Interface Technology Enhancements, the AEMC’s Accelerating smart meter deployment rule change, and the October 2025 Victorian Emergency Backstop Mechanism 2 (VEBM 2) Ministerial Order. Jemena has identified total incremental costs (capital and operating expenditure) as follows:

  • AEMO’s Market Interface Technology Enhancements – $5.5 million
  • Accelerating smart meter deployment – $16.1 million
  • VEBM 2 Ministerial Order – $17.3 million.

Natural Disaster Event

Energex has submitted a cost pass through application seeking to recover incremental costs incurred as a result of Tropical Cyclone Alfred. Energex has identified total costs of $60.4 million, largely related to operating expenditure for network repair and restoration following the event.

 

 

Submissions, and requests to make a submission via alternative methods, should be emailed to costpassthroughsataer [dot] gov [dot] au (costpassthroughs[at]aer[dot]gov[dot]au). 

If we do not receive any submissions from stakeholders on a cost pass through application, after reviewing the application and supporting information we may not make a determination under clause 6.6.1(d) of the National Electricity Rules (NER). If we do not make a determination then, in accordance with clause 6.6.1(e) of the NER, the amount proposed in the application is taken to be the approved pass through amount.

Background

A cost pass through application allows network businesses to recover efficient costs, not accounted for in current revenue determinations, associated with certain specified events such as changes in regulatory obligations or service standards, and natural disaster events. 

Under the National Electricity Rules, the AER is required to assess cost pass through applications from network businesses where such events result in a material change in the cost of providing services. In making our assessments, the AER has regard to relevant factors in the National Electricity Rules and seeks to ensure that consumers pay no more than necessary for safe and reliable energy.