This scheme provides incentives for the Victorian electricity distributors 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 distributors 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 at the average number of fire starts during the period 2006–10 for each business.
Having considered submissions received through public consultation, our final determination regarding 2014 fire start outcomes confirms the position adopted within our draft determination published on 24 June 2015. This fire start outcome of 2014 will apply to 2016 network tariffs.
Under this determination, all Victorian electricity distributors, except AusNet Services, will receive a penalty because there were more fire starts than the respective benchmark targets. The penalties range from $15 000 for CitiPower to $2 245 000 for United Energy. AusNet Services will receive a $1 870 000 reward as its fire start number was below its benchmark target.
The effect of this decision will result in a small increase in AusNet Services’ network tariff for 2016 (about $2.79 per annum per customer) and a reduction in all other network tariffs of between $0.05 to $3.43 for the 2016 calendar year, depending on a customer’s distribution area. The table below provides further details of financial reward or penalty amounts and the average impact on customers' network charges for 2016.
The f-factor is an incentive scheme. Victorian electricity distributors can only retain their rewards for sustained and continuous improvements by mitigating the number of fire starts. Once improvements are made, the benchmark fire start targets will be tightened in future years.