The AER today published its determinations on Jemena, Powercor and United Energy’s cost pass through applications to recover costs related to the Victorian Emergency Backstop Mechanism (VEBM).
Our decision is to approve reduced positive pass through amounts of $8.3 million (nominal, smoothed), $11.5 million (nominal, smoothed) and $6.5 million (nominal, smoothed) for Jemena, Powercor and United Energy respectively. The network businesses will be able to recover these amounts in the 2025–26 regulatory year.
Our review of Jemena, Powercor and United Energy’s applications found that the introduction of the VEBM in Victoria met the definition of a service standard event under the National Electricity Rules, and that these networks have incurred materially higher costs as a result of the event. While we found that the networks had proposed reasonable costs to implement the VEBM, we made minor modelling adjustments which are reflected in our approved pass through amounts for all three networks.
The average annual bill impact will be approximately $10 (nominal), $7 (nominal) and $6 (nominal) for Jemena, Powercor and United Energy respectively, for residential customers in the 2025–26 regulatory year.
Background
The VEBM requires all new and replacement solar systems connected to distribution networks to be able to be remotely interrupted or curtailed when directed by AEMO in a minimum system load event to maintain whole of system security.
The National Electricity Rules recognise that distribution and transmission network service providers may apply to adjust allowed revenues within a regulatory period to account for changes in costs incurred during a regulatory control period if predefined events occur. Our role is to determine whether a positive or negative change event has occurred, and if so to determine the amount of prudent and efficient costs that should be passed through, to ensure consumers pay no more than necessary.