This scheme is required by the Victorian Government to provide incentives for Victorian 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 $25,000 per fire for performing better or worse than their respective targets and also requires the target to be set at the average number of fire starts during the period 2006-10 for each business.
The f-factor is an incentive scheme. DNSPs can only retain their rewards for sustained and continuous improvements. Since the benchmark fire-start targets are based on historical averages, as improvements are made, the fire-start targets are progressively tightened in future years.
Under the scheme, we must publish a draft "f-factor amount determination" for consultation before determining the final reward or penalty amounts each year.
The table shows the effect of this draft determination. The outcome of this determination will be reflected in DNSPs’ network charges for 2015.
| DNSP | Difference between target & reported number of fire starts (a) | Incentive rate ($) | Pass through amount ($) | Approximate cost impact ($) per customer p.a. |
|---|---|---|---|---|
| Citipower | (2.6) | 25 000 | (65 000) | (0.21) |
| Powercor | (96.2) | 25 000 | (2 405 000) | (3.27) |
| Jemena | (34.2) | 25 000 | (855 000) | (2.77) |
| SP AusNet | 80.8 | 25 000 | 2 020 000 | 3.11 |
| United Energy | (2.8) | 25 000 | (70 000) | (0.11) |
(a) Numbers in brackets represent more fire starts than the benchmark targets, resulting in negative adjustment to the allowable revenue and reduction in network charges.
Invitation for submissions
We are now seeking submissions from interested stakeholders on the AER's draft f-factor determination by Friday 25 July 2014.
Submissions should be emailed “Attention: Chris Pattas, General Manager, Network Operations and Development Branch” at AERInquiry
aer [dot] gov [dot] au (AERInquiry[at]aer[dot]gov[dot]au) with the following title in the email: Draft f-factor amount determination.
Alternatively, written submissions can also be sent to:
Mr Chris Pattas
General Manager— Network Operations and Development Branch
Australian Energy Regulator
GPO Box 520
Melbourne VIC 3001
The AER prefers that all submissions be sent in an electronic format in Microsoft Word or other text readable document form and publicly available, to facilitate an informed, transparent and robust consultation process.
Accordingly, submissions will be treated as public documents and posted on the AER's website, unless prior arrangements are made with the AER to treat the submission, or portions of it, as confidential. Those wishing to submit confidential information are requested to:
- clearly identify the information that is the subject of the confidentiality claim; and
- provide a non-confidential version