In 2019, we developed the values of customer reliability (VCR) methodology for standard outages (up to 12 hours), following extensive consultation and quality assurance. We used that methodology to calculate our VCR.
We must review the 2019 VCR methodology before updating the VCR and update the VCR by 18 December 2024.
Background
VCR seek to reflect the value different types of customers place on reliable electricity supply under different conditions. VCR play an important role in ensuring customers pay no more than necessary for reliable energy, helping energy businesses identify the right level of investment to deliver reliable energy services to customers.
Scope of the review
Our 2024 VCR methodology covers standard power outages (up to 12 hours) in the National Electricity Market (NEM) and the Northern Territory.
Most outages customers experience in the NEM and the Northern Territory originate in distribution networks. Consequently, the standard outage VCR have a wide application, including as an input for cost-benefit assessments, such as those applied in regulatory tests that assess network investment proposals.
The AER will separately undertake work to address outages that are longer than 12 hours. For example, storm-related outages in Queensland (December 2023 - January 2024) and Victoria (February 2024), where some customers experienced prolonged outages, highlight the importance of this work.
Progress
Ahead of our 2024 VCR review, we issued an information notice on 14 December 2023 to provide stakeholders with information on the background, reasoning, and scope of the review.
On 22 March 2024 we published our first draft determination on the VCR methodology, commencing formal consultation using the expedited rules consultation procedure. We set out our proposed amendments to the 2019 VCR methodology, our rationale for the amendments, and our reasons for considering the proposed amendments a Non-material Proposal under the National Electricity Rules.
On 21 May 2024, we published a notice of our decision to switch to the standard rules consultation procedure for the 2024 review. The decision followed stakeholder feedback and allows additional consultation opportunities and further consideration of issues raised by stakeholders. The first draft determination is now considered a consultation paper.
On 5 June 2024, we published our revised draft determination on the VCR methodology, responding to key points raised by stakeholders in response to the first draft and identifying several areas where we consider further stakeholder views would be valuable.
On 30 August 2024, we published our final determination on the VCR methodology, laying out the approach we will use to calculate the VCR and incorporating stakeholder feedback on the revised draft. We also published reports from our project partners on the pilot survey we conducted in March and April 2024.
On 18 December 2024, we published the 2024 VCR in our final report on the 2024 VCR values, summarising the approach we used to produce the values and our key findings from the review.