The AER is responsible for approving the distribution tariffs and the pass through of transmission tariffs for the Victorian distribution businesses.
Changes to transmission tariffs are limited to a re-balancing constraint of CPI + Z + Y per cent. The Z factor is calculated as the average annual increase in transmission costs up to an 18 per cent cap; and the Y factor is equal to 2 per cent.
Under clause 3.4.7 of the Electricity Distribution Price Review 2006-10 - Final Decision Volume 2, the Regulator may adjust the re-balancing constraint that applies to transmission tariffs where it is satisfied that a distributor will not be able to recover its expected transmission related costs even if all existing transmission tariffs are increased by the existing transmission control.
In September and October 2009 the AER received submissions from CitiPower, Jemena, Powercor and United Energy to vary the transmission control in order to pass through increases in transmission related costs.
The AER has considered the proposed variations to the transmission re-balancing constraint and approves the following changes:
| DNSP | Proposed Variation (%) | Staff Recommendation (%) |
| CitiPower | 15 | 12 |
| Powercor | 32 | 26 |
| Jemena | 10.8 | 10.8 |
| United Energy | 13 | 20.5 |
Details of the AER's decision are available on the AER's website.