AER publishes F-factor final amount determinations for calendar year 2012

The f-factor scheme was established by the Victorian Government in June 2010. The scheme provides incentives for Distribution Network Service Providers (DNSPs) to reduce the risk of fire starts due to electricity infrastructure, and to reduce the risk of loss or damage caused by fire starts. For the first four years of the scheme (2012-15), the legislation prescribes that DNSPs will be either rewarded or penalised at the incentive rate of $25,000 per fire for performing better or worse than their respective targets and also requires the target to be set on the basis of a historical average – the average of fire starts during the five year period (2006-10) for each business.

Following public consultation, we decided to confirm our decision to adopt our previously published draft determination, on 20 June 2013, for the 2012 fire start results.

Under this determination, each of the Victorian DNSPs will receive a reward under the scheme as their actual number of fire starts for the 2012 year were below that of their respective fire start targets. This will mean a small increase in network tariffs of between $0.03 to $3.16 for the 2014 calendar year, depending on a customer’s distribution area. The table below provides further details of the average impact on customers' network charges for 2014.

The f-factor is an incentive scheme. DNSPs can only retain their rewards for sustained and continuous improvements. Once improvement is made, the benchmark fire-start targets will be tightened in future years.