The Australian Energy Regulator (AER) has today released its determination, made on 7 March 2012, on Powercor Australia Ltd’s (Powercor) cost pass through application of 13 December 2011 for recovery of costs arising from the Victorian Bushfire Royal Commission (VBRC) recommendations.
Under section 6.6.1 of the National Electricity Rules (NER), where a positive change event occurs, a Distribution Network Service Provider (DNSP) may seek the approval of the AER to pass through to Distribution Network Users a positive pass through amount. The pass through provisions of the NER operate to allow a DNSP to recover additional costs that it will incur during a regulatory control period where certain conditions are satisfied. Powercor submitted a pass through application to the AER to recover costs arising as a result of Energy Safe Victoria’s decision to accept Powercor’s Revised Electricity Safety Management Scheme (ESMS), and from the imposition of a program to transition toward a shorter inspection cycle for network assets in high bushfire risk areas. Powercor’s Revised ESMS and asset inspection cycle incorporate two of the VBRC recommendations. In its application, Powercor sought to recover expenditure of $85.14m ($2012), over the course of the 2011–15 regulatory control period.
The AER determined that a positive pass through event occurred and has approved additional capital and operating expenditure of $73.98m ($2012). This represents a reduction to Powercor’s proposed capital and operating expenditure of $11.16m ($2012).