On 31 August 2018, the AER made a final decision in relation to tranche two of Powercor's contingent project application.
Our decision departs from Powercor's proposed revenue amendments by allocating reduced funding for High Voltage customer works following changes to the Victorian Electricity Distribution Code which transferred customer equipment compliance obligations from distributors to HV customers.
Our decision will facilitate prudent and efficient implementation of the Bushfire Royal Commission recommendations which have the objective of minimising the risks of bushfires being started by electricity assets and increase customer safety. This additional protection to customers from the installation of these assets is expected to add $10, or 0.5 per cent in 2019, and $12 or 0.6 per cent in 2020 to a Powercor residential customer bill.
Background
On 20 April 2018, Powercor submitted an application to the AER seeking a determination, with respect to the Victorian State regulatory requirement to install Rapid Earth Current Fault Limiters (REFCLs), that funding for a contingent project be approved and their maximum allowed revenue be adjusted in accordance with clause 6.6A.2 of the NER.
On 1 May 2016, the Electricity Safety (Bushfire Mitigation) Amendment Regulations 2016 (Amended Bushfire Mitigation Regulations) came into effect in Victoria. The amended regulations require Victorian distributors to install REFCLs at designated zone substations. The purpose of the REFCL devices is to reduce the risk of a bushfire caused by a fallen powerline. Powercor are required to meet a defined quota of zone substations with operational REFCLs by 1 May 2019 with an additional quota to be operational by 1 May 2021 and the remaining designated zone substations fitted with REFCLs by 1 May 2023.
This contingent project application seeks funding for the second tranche of REFCL installations and associated works for the following zone substations:
- Ballarat North
- Ballarat South
- Bendigo
- Bendigo Terminal Station
- Charlton
- Geelong
The installation of REFCLs will necessitate other capital replacement and upgrade works across the distribution network. Powercor's application seeks funding of expenditure for both REFCL installation and consequent works.
Extension of time
On 4 May 2018, the AER issued a notice to extend the deadline for making a decision in accordance with clause 6.6A.2(j) of the NER. The new date for the decision is on or before 10 September 2018.
Invitation for submissions
Submissions on Powercor's contingent project application closed 15 June 2018