On 6 May 2022, the Electricity Distribution Network Resilience Review Expert Panel (Expert Panel) completed its final recommendations report and provided it to the Minister for Energy, Environment and Climate Change. The Expert Panel has made eight recommendations (36 including sub recommendations) that contain a comprehensive set of reforms designed to reduce both the likelihood and impact of prolonged power outages.

The Victorian Government will now develop its response to the recommendations of the Review.

Electricity Distribution Network Resilience Review Final Recommendations Report (PDF, 1.4 MB)

Electricity Distribution Network Resilience Review Final Recommendations Report (DOCX, 1.7 MB)

The Victorian Government initiated the Distribution Network Resilience Review (Review) in response to the June and October 2021 storms. The Review was conducted between September 2021 and May 2022, over two Phases.

Phase 1 resulted in eight recommendations for operational improvements and information sharing during energy emergencies, which were designed for implementation ahead of summer 2021-22. Actions to implement these recommendations were underway by the end of 2021, and before the second major storm event which impacted Victoria in October 2021.

On 15 February 2022, the Minister for Energy, Environment and Climate Change announced the establishment of an Expert Panel to lead Phase 2, to investigate long-term reforms to the state’s electricity distribution network.

Expert Panel Phase 2 Recommendations

Phase 2 of the Review examined how distribution network businesses can improve their preparedness for, and response to, prolonged power outages arising from storms and other extreme weather events, which are increasing with the impacts of climate change. The Review also considered ways to strengthen community resilience in the face of prolonged power outages, such as those that occurred in June and October 2021.

Recommendations 1-3 seek to reduce both the likelihood and impact of prolonged power outages. This includes that distribution businesses are required to develop a Victorian Network Resilience Investment Strategy (VNRIS). The VNRIS would require distribution businesses to invest in resilience solutions to mitigate the risk of prolonged outages at the highest-risk locations, informed by community needs, by June 2026.

Recommendations 4-8 seek to reduce the impact of prolonged power outages through actions undertaken in preparation for and during an outage event. These include additional obligations on distribution businesses to:

  • participate in municipal and regional emergency management planning processes
  • prioritise restoration of vulnerable customers, critical infrastructure and community assets through a priority service register
  • provide customers with more timely and relevant information during a power outage
  • administer the prolonged power outage payment, and
  • conduct and publish after action reviews.

Small generator program

During the June and October 2021 storm events, the Victorian Government provided small generators to households affected by prolonged power outages. The Panel found that the costs and risks associated with small generators are significant. The Panel recommended that the Department of Environment, Land, Water and Planning divest its fleet of small generators, noting that distribution businesses should continue to explore the use of larger portable generators in support of the network during outages. The Victorian Government will consider this recommendation as it develops its response to the Review.

Frequently asked questions and related issues

Instigated in August 2021, the review examined how distribution businesses can improve network preparedness and response to prolonged power outages arising from storms and other extreme weather events, as well as strengthen community resilience to prolonged power outages.

The Expert Panel was appointed to consider evidence from both the June and October 2021 storms to determine appropriate long-term measures, policies and regulatory reform options to mitigate and better respond to prolonged power outages.

The Expert Panel considered evidence from both the June and October 2021 storms to determine appropriate long-term measures, policies and regulatory reform options to mitigate and better respond to prolonged power outages.

The Expert Panel found that distribution businesses are not proactively investing to mitigate the risk of prolonged power outages, partly because the national regulatory framework does not embed resilience as an objective. To address this finding, the Panel made recommendations to help reduce both the likelihood and impact of prolonged power outages. This includes that the Victorian Government should develop a Victorian Network Resilience Investment Strategy (VNRIS). The VNRIS would require distribution businesses to carry out analysis of the risk of extreme weather events on their networks, working with at-risk communities and DELWP, and ultimately require them to invest in resilience solutions to mitigate the risk of prolonged outages at the highest-risk locations by 2025.

The Panel also found that distribution businesses need to do more to improve outcomes for customers impacted by prolonged power outages and support community resilience. To address this finding, the Panel made recommendations to help reduce the impact of prolonged power outages through actions undertaken in preparation for and during an outage event. These include obligations on distribution businesses to partner with communities, prioritise restoration of vulnerable customers, and to provide customers with more timely and relevant information.

The Expert Panel is led by Chairperson Jo Benvenuti, a former Executive Officer at Consumer Utilities Advocacy Centre and an experienced consultant across consumer engagement and energy and water policy.

She is joined by Dr Claire Noone, a Principal at NOUS Group who has experience in regulatory design and led reform work at Consumer Affairs Victoria; and Mark Paterson, the Managing Director of low-carbon energy systems firm Strategen who has previously worked across distribution networks in a CSIRO leadership role.

Phase 1 delivered a report by consultants Advisian with short-term recommendations to be implemented for summer 2021-22. Action is now underway for all eight identified recommendations, including several measures already underway prior to the October 2021 storm.

The phase 1 recommendations focussed on operational improvements to the way the Department of Environment, Land, Water and Planning coordinates energy emergency responses. Measures underway include improvements to communication with critical infrastructure operators, enhanced public messaging to support community preparedness, and faster and more streamlined support for power-dependent customers.

The review included consultation with local councils, the emergency management sector, electricity distribution businesses, community organisations and local communities in areas that were heavily impacted by the June and October 2021 storms .

A survey was conducted of over 800 community members affected by the storms. In March 2022,  the Expert Panel led three half-day stakeholder roundtable workshops attended by 24 stakeholders representing the groups listed above.  A consultation paper was shared with roundtable participants, and 7 written submissions were received.

In April 2022, the Panel met face-to-face with local communities in areas that were heavily impacted by the June and October 2021 storms. The Panel visited seven locations across Victoria which had experienced prolonged power outages in the storms in June and October 2021, hearing in person from 67 members of the public. .

The seven roundtables, which were held on 19, 20, and 21 April, were kept to around ten people each to enable the Panel to hear fully from participants. Each meeting ran for one and a half hours as a facilitated conversation.

In addition, the Panel received ten written submissions from community members unable to attend the roundtables in person. Some further one-on-one discussions with community members were also held by the Panel Chair. .

Feedback received during consultation was a key input into the development of the Panel’s recommendations.

The Panel recommended reforms to help reduce both the likelihood and impact of prolonged power outages. Recommendations are below.

Table 1 Recommendations to help reduce both the likelihood and impact of prolonged power outages, though resilience investments

Immediate, short-term reforms to drive investment in the current regulatory period (before 2025):

Recommendation 1: A Network Resilience Investment Strategy should be developed in the short term, with actions that can start immediately, to drive distributor investments in resilience solutions, informed by risk analysis and community needs. This should result in investments and solutions in the most high-risk locations by 2025.

1.1 Identify high-risk locations

The distribution businesses should be required to develop a Prolonged Power Outage Risk Assessment (PPORA) identifying areas of the network at highest risk to credible scenarios of climate risk events. This should be done by:

  • Developing  credible scenarios of high risk weather events (including high winds, high   rainfall, hail storms, lightning strikes, localised or widespread flooding, localised or widespread bushfires, and coastal surges) for the network, with a separate risk forecast for each type of event, drawing on climate risk  information; and
  • Identifying  the areas of the network at the highest risk of prolonged outages due to  climate risk, geographic factors and the nature of the distribution assets  (including asset age and asset type).

1.2 Conduct geospatial analysis

DELWP should develop a geospatial analysis of climate risks, including PPORA data provided by the distribution businesses and other data provided by other agencies on critical infrastructure and community needs.

1.3 Support local councils to identify the needs of community hubs

The distribution businesses and DELWP should be required to support local councils in high-risk areas to identify the needs of local community hubs in close consultation with the local community. In doing so:

  • the distribution businesses should engage with the local councils, providing them with the findings of their PPORA analysis from Recommendation 1.1; and
  • DELWP  should assist the local councils by engaging with them with regard to the results from the geospatial analysis from Recommendation 1.2.

1.4 Identify range of potential investments

The distribution businesses should be required to identify a range of potential investment solutions to address risk at the highest risk locations. This should be informed by:

  • the geospatial analysis developed by DELWP in Recommendation 1.2, which will provide   insight into the essential services needs and critical infrastructure vulnerabilities at each high-risk location; and
  • feedback from the local community and the local councils in each of the high risk locations, which should be actively sought by the distribution businesses to   inform the development of potential investment solutions.

1.5 Identify preferred investment solution(s)

The distribution businesses should be required to submit one or more preferred investment (or operating) solution(s) to address risk in each high-risk location, to DELWP, based on their analysis from Recommendation 1.4. This proposal should include the requirements listed in Section 4.1.5.

1.6 Conduct cost-benefit analysis (CBA) and identify investment sources

DELWP should conduct a cost-benefit analysis of the preferred investment solution(s) identified by the distribution businesses in Recommendation 1.5. The distribution businesses should be required to provide input into DELWP’s cost-benefit analysis.

This CBA should provide a holistic and contextual assessment of costs and benefits, including an assessment of external/non-network benefits. This should include an assessment of the costs and benefits to communities, networks and electricity consumers together.

Based on this CBA, for each investment where benefits are outweighed by costs, DELWP should identify funding sources, setting out the investment contributions required from the range of co-investing parties.  Funding for resilience may be drawn from a mixture of:

  • investment  from the distribution businesses (to be recovered under the national  regulatory framework);
  • funding  contribution from communities (who will benefit directly from improvements in   resilience and potential environmental benefits resulting from the   investments);
  • funding from other private investors (such as retailers who might be interested in commercial opportunities with the assets), where private benefits that can be captured; and
  • funding  contribution from the government (where the benefits of any solution are wider than those accruing to electricity consumers, such as in reducing the cost of the government’s emergency response functions).

1.7 Introduce new regulatory obligations to invest

The Victorian Government should impose regulatory obligations on the distribution businesses requiring them to invest in the preferred resilience solutions at the highest-risk locations, as identified in Recommendation 1.6, with penalties for non-compliance. This should take account of the community, private investor and government investment contributions identified from the cost benefit analyses in Recommendation 1.6.

Medium term, enduring reform to embed resilience investments in the Victorian framework (from 2025 onwards)

Recommendation 2: The distribution businesses should be required to take an all-hazards approach to risk mitigation for the purposes of safety, reliability, security and resilience of the electricity system. This should result in a regular assessment (at least every 5 years) of the need for investments and solutions in the-most high risk locations, from 2025 onwards.

2.1 Develop a 5-yearly Network Resilience Plan

The distribution businesses should be required to develop a Network Resilience Plan at least every 5 years. The object of the Plan will be to mitigate hazards to the distributor’s network that could result in prolonged power outages under a range of scenarios. This Plan may incorporate relevant parts of a distributor’s Bushfire Mitigation Plan (depending on the legislative or regulatory approach taken to implementation).

2.2 Incorporate and refresh the PPORA

The Network Resilience Plan in Recommendation 2.1 should incorporate and refresh the distributor’s PPORA in Recommendation 1.1.

2.3 Submit plan, comply with regulatory requirements

The distribution businesses should be required to submit the Network Resilience Plan in Recommendation 2.1 to a regulator for approval, consistent with the framework for Bushfire Mitigation Plans. The distribution businesses should be required to comply with the regulatory requirements, with penalties for non-compliance.

Driving investments in resilience in the longer-term, from the next regulatory period  (from 2026 onwards)

Recommendation 3: The national legislative framework should be amended to drive distributor investments in resilience in the longer-term. To implement these changes, the Panel proposes that the Victorian Government should seek to amend the AER’s framework, through working with the AER and through a series of proposed Rule changes, to embed resilience in the national framework from the next regulatory period (from 2026 onwards) and avoid the need for Victorian Government intervention in the longer term.

3.1 Assess willingness to pay

DELWP should work with the AER to support the assessment of customer willingness to pay to avoid wide area, long duration outages (WALDO). This work should be led by the AER, with input from DELWP to incorporate data and learnings from the 2021 Victorian storms.

3.2 Account for resilience as a capital expenditure objective

DELWP should propose a Rule change to the capital expenditure objectives under rule 6.5.7 to specifically account for resilience.

3.3 Introduce a new regulatory mechanism to drive resilience

DELWP should propose a Rule change for the AER to incorporate a new regulatory mechanism to drive proactive investments in network resilience.

Table 2: Recommendations to help reduce the impact of prolonged power outages, through actions undertaken in preparation for, during, and after an outage event

Partnering with communities

Recommendation 4: The distribution businesses should be required to partner with communities and local councils in emergency planning and response

4.1 Support municipal and regional emergency Planning

The distribution businesses should be required to provide structured input and periodic updates for municipal and regional emergency management plans (and associated relief and recovery plans, including by:

  • providing their PPORA analysis from Recommendation 1.1, which identifies highest risk   locations of the network, to the relevant Municipal Emergency Management Planning Committees (MEMPCs) and Regional Emergency Management Planning Committees (REMPCs);
  • seeking MEMPC and REMPC input into Recommendation 1.4, on how to best tailor potential investment solutions at each high risk location to help meet to the needs to local communities; and
  • providing input and support to the business continuity plans for relief centres and community hubs at each high risk location, including those identified in Recommendation 1.3, to ensure that they can continue to operate during a prolonged power outage.

4.2 Provide support to emergency response

The Regional Controller or Incident Controller should be given a new directions power to require the distribution businesses, if requested following a major energy emergency, to:

  • participate in a relevant meeting or shift briefing of any Incident Emergency Management   Team (IEMT) or Regional Emergency Management Team (REMT), on a daily basis for the duration of an emergency response;
  • attend   a relief centre or community hub, or a community meeting, to provide information to impacted community about the incident and response activities;   and
  • take reasonable steps to ensure that relief centres and community hubs can continue to operate during a prolonged power outage. This may involve the prioritisation of relief centres and community hubs in restoration activities (at the expense of other customers).

4.3 Backup generation

DELWP should divest the existing fleet of small generators, noting the lack of equitable access and effectiveness, risks and costs associated with the Victorian Government’s small generator program.

The distribution businesses should continue to explore the use of larger mobile back up generation to assist with restoration of essential services, community hubs, network sections.

The distribution businesses should also explore the increased use of microgrids and standalone power systems to mitigate the likelihood of prolonged power outages at high-risk locations, as supported by Recommendations 1, 2 and 3.

Prioritisation of the restoration of power

Recommendation 5: The distribution businesses should have new obligations to improve the prioritisation of the restoration of power following an outage

5.1 Improve the life support register

The life support register and registration process should be reviewed by the ESC, with support from DELWP and Department of Health (DH), with a view to improving the efficiency of relief activities during a prolonged power outage.

5.2 Maintain a priority service register (PSR)

DELWP and the ESC should develop definitions of ‘vulnerable persons’, ‘critical infrastructure’, and ‘community assets’ for the purposes of establishing a Priority Service Register (PSR).

DELWP and the ESC should consider how a PSR can be developed in practice, including whether parties would be required to self-register or if this information can be provided by other agencies.

The distribution businesses should be required to work with DELWP and the ESC to establish the PSR, and then must maintain and update the PSR, to help inform restoration priorities.

5.3 Prioritise the restoration of power having regard to the PSR and State Emergency Management Priorities

Distribution businesses should make best endeavours to prioritise restoration activities having regard to the PSR and  the State Emergency Management Priorities, where feasible and practical. This should be achieved via a general obligation on the distribution businesses.

 

5.4 Avoid non-urgent scheduled maintenance

The distribution businesses should avoid, to the extent possible, non-urgent scheduled maintenance for a period after prolonged power outages, to allow time for communities to recover from their devastating impacts.

Information provision

Recommendation 6: The distribution businesses should improve their communication with customers before and after prolonged power outages

6.1 Improve communication with customers

6.1.1 The distribution businesses should have a new general obligation to provide information to their customers who are off supply due to extreme weather events, including safety messaging, information on the severity of the outage, and information on the actions being taken to assess damage and restore power in the local area. This should include information on the phases and stages of restoration.

6.1.2 The distribution businesses should have a new general obligation to receive information from the local councils on real-time community data and sentiment.

6.1.3 The distribution businesses should have a new general obligation to assist local councils with pre-preparing customers at high risk of prolonged power outages (and frequent unplanned outages).

6.2  Provide additional information if requested

The Secretary DELWP, or delegate, should be given a new directions power to require the distribution businesses, if requested following a major energy emergency, to provide additional information or support to assist communities with restoration activity

Relief support

Recommendation 7: Improve delivery of relief to customers affected by prolonged power outages

7.1 Victorian Government should review the co-ordination and availability of relief programs for prolonged power outages

The Victorian Government should review the coordination of relief programs during a prolonged power outage, with a view to improving outcomes and the experience of the community so that they are clear on what relief is available and how it can be accessed.

The review of relief programs should also consider whether there are gaps in relief funding. In particular, the role of relief payments and rebates for small businesses should be assessed.

7.2 Victorian Government should commit to funding PPOP

Victorian Government should commit to funding the Prolonged Power Outage Payment (PPOP).

In formalising the PPOP, the Victorian Government should re-assess the threshold for the PPOP, including whether the seven-day eligibility criteria is appropriate, in the context of other relief payments that are also available, based on the review from Recommendation 7.1.

7.3 Distribution businesses should administer payment

The distribution businesses should be required to administer the PPOP to their customers who are without power who meet the Victorian government’s eligibility criteria.

7.4  Distribution businesses should support relief programs

The Secretary DELWP, or delegate, should be given a new directions power to require the distribution businesses, if requested following a major energy emergency, to provide customer information and/or take reasonable steps to deliver or assist in the delivery of relief activities, where they are best placed to do so.

After action reviews

Recommendation 8: The distribution businesses should be required to conduct after action reviews (AARs) to improve outcomes for customers impacted by prolonged power outages

8. Conduct and publish after action reviews

The distribution businesses should be required to conduct an after-action review of any major energy emergency, and to publish a summary of that review including improvement actions (lessons), within six months of the event. This should include customer surveys and focus groups.

The Panel considered feedback on the small generator program from a range of stakeholders during the review, and concluded that the costs and risks associated with small generators are significant and outweigh the potential benefits of the program.

The Panel recommended that distribution businesses continue to explore the use of larger portable generators to support the network, including to restore power to essential services and community hubs during outages. The Panel also recommended that distribution businesses explore the increased use of microgrids and standalone power systems to mitigate the likelihood of prolonged power outages at high-risk locations. Supporting communities to take control and exercise greater autonomy in preventing, planning for, preparing for, and recovering from emergencies, is a central feature of Victoria’s emergency management framework.

The Victorian Government will consider this recommendation as it develops its response to the Review.

The Panel has made recommendations for short, medium and longer term reforms. The reforms are subject to government consideration. However, if accepted by government, new obligations on distribution businesses to provide customers with access to information and support would be expected by 2023. The first round of distribution businesses’ investment in resilience would be expected by early 2025, with ongoing investments occurring from 2025.

The Panel recommended that the Victorian Government commit to funding Prolonged Power Outage Payments and to re-assess its seven-day eligibility criteria. Following the June and October storms, the Victorian Government provided Prolonged Power Outage Payments of $1,680 per week to customers in storm-affected areas. If implemented, these changes could be made in 2023, and payments made available to customers impacted by prolonged power outages.

If implemented as recommended, new obligations on distribution businesses to provide customers with access to information and support and to receive information from local councils on real-time community data and sentiment would be expected by 2023.

Additionally, if implemented as recommended, the first round of distribution businesses’ investment in resilience would be expected by early 2025, with ongoing investments occurring from 2025.

The reforms are designed to be holistic and require wide ranging involvement from industry, government, the emergency management sector, and communities in high-risk locations. The Panel has recommended that funding is based on the beneficiaries of any investment, but also that Government is best placed to identify funding sources for resilience projects.

Reducing cost impacts on customers was a consideration of the Panel. However, the Panel found that many customers in areas affected by prolonged power outages are willing to pay more for resilience solutions. The Panel has recommended that the Department of Environment, Land, Water and Planning work with the Australian Energy Regulator to assess how much customers are willing to pay for resilience.

Consultation is now closed for this review.

The phase 1 findings and recommendations are included in the phase 2 final report.

Apart from the outcomes of phase 1 relating to improvements to communication with critical infrastructure operators, enhanced public messaging to support community preparedness, and faster and more streamlined support for power-dependent customers, there are regulatory incentives for distribution businesses to ensure that their customers have a reliable supply of electricity under the Electricity Distribution Code. These include the Service Target Performance Incentive Scheme (STPIS) whereby distribution businesses are financially penalised for delivering poor levels of reliability and the Guaranteed Service Level (GSL) scheme under which payments are automatically made to individual customers who experience outages that exceed the prescribed annual duration/frequency thresholds.

In addition, following the June and October storms, the Victorian Government deployed generators and Prolonged Power Outage Payments of $1,680 per week to customers in storm-affected areas.

Page last updated: 29/06/22