The Australian Energy Regulator (AER) today published its determination on AusNet Services' cost pass through application relating to distribution network costs as a result of the September 2024 storm in Victoria.
The AER’s decision is to approve a cost pass through amount of $12.9 million ($nominal). This will allow AusNet Services to recover this amount through network charges over the next two years:
- $6.3 million to be recovered in 2025–26
- $6.6 million to be recovered in 2026–27.
The AER has determined that the September 2024 storm met the definition of a natural disaster pass through event and that AusNet Services incurred materially higher costs as a result.
The increased costs incurred by AusNet Services include capital and operating expenditure required to repair the network and restore supply to customers, as well as Guaranteed Service Level payments to customers who experienced an outage of more than 12 hours, in accordance with the Victorian Electricity Distribution Code. We have assessed AusNet Services’ incremental costs associated with the storm event as required under the National Electricity Rules and, subject to minor adjustments to remove costs not related to the storm event and correct modelling inputs, consider them to be prudent and efficient in the circumstances.
On average, the estimated bill impact of this cost pass through for AusNet Services’ customers is an increase of approximately $5 for residential customers and $18 for small business customers over two years from 2025–26 to 2026–27.
Background
The September 2024 storm event caused severe damage to AusNet Services' distribution network, including fallen and damaged powerlines, power poles and transformers due to fallen trees and branches. This, in turn, caused widespread power outages throughout AusNet’s distribution network affecting 180,000 customers, around 20% of AusNet Services’ customer base.
Network service providers are required to make Guaranteed Service Level payments to customers where certain levels of service are not met in accordance with the Electricity Distribution Code and the conditions of AusNet Services' distribution licence. These payments can be recovered under the cost pass through framework as they are a regulatory obligation on AusNet Services.
Under the National Electricity Rules, the AER is required to assess cost pass through applications in relation to natural disaster events. The AER's 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.