On 21 November 2014 the AER approved an application by Australian Gas Networks (AGN) (Victoria), formerly Envestra, for increased costs arising from its 2013–17 mains replacement program.
On 31 July 2014, AGN submitted a cost pass through tariff variation application to pass through to customers an increase in mains replacement costs. The application is for expenditure to complete 331 km of mains replacement. This is in addition to the 365 km of mains replacement we approved in its current access arrangement for its Victorian gas distribution network.
Provision for this pass through was made in Envestra’s 2013–17 access arrangement. It was implemented in the context of the Victorian gas businesses proposing and receiving funding for large volumes of mains replacement but not undertaking the volumes during the previous access arrangement period. We provided the pass through to enable the businesses to receive additional funding, only once they had delivered a trigger volume of mains replacement. Allowing for the additional funding is consistent the objective of removing all cast iron mains over the longer term, consistent with the businesses’ Gas Safety Cases, approved by Energy Safe Victoria.
We approved the tariff variation because AGN has completed the trigger volume of mains replacement and provided evidence that it intends to complete an additional 331 km to that for which we originally provided an allowance.