The Australian Energy Regulator (AER) has released its final determinations on the Victorian f-factor scheme for the 2016–2020 regulatory period.
The f-factor scheme encourages distributors to improve their operations so they reduce the type of instances that could lead to bushfires. The scheme does this by incentivising distribution businesses to reduce these risks, particularly in bushfire prone areas.
On 22 December 2016, the Victorian Government published the ‘f-factor scheme order 2016’ (the Order) that revoked the original scheme and provided for the establishment of a new scheme. The Government has prescribed all the elements of the scheme, including the performance measures, performance targets, data verification process and the precise methods to determine the incentive payments (or penalties). Under this new scheme the AER will determine the ‘reward and penalty’ amounts for ‘fire starts’ as part of the distribution businesses’ annual pricing approval process.
We released draft determinations in on 3 April 2017 and no major concerns were raised by the stakeholders.