The f-factor Incentive Scheme is a regulatory instrument under the National Electricity (Victoria) Act 2005 designed to provide electricity distribution network businesses with an incentive to lower the number of fire starts on their networks in Victoria.

The Victorian Government introduced the original f-factor scheme in 2012 as one of several measures in response to the 2009 Black Saturday bushfires. Under the original f-factor scheme, the distribution businesses were provided with a flat incentive for each ignition.

In 2016, the f-factor scheme was substantially enhanced. The 2016 f-factor scheme applies a more targeted risk incentive which will assist in the delivery of investment and operational improvements to the highest bushfire risk areas of the state.

Background

The 2016 changes to the f-factor scheme were intended to strengthen the focus of electricity distribution businesses on network ignitions of greatest bushfire risk. The 2016 scheme does this by weighting each ignition by its location and time. The 2016 f-factor scheme will impose higher penalties or higher rewards for fires of greater risk.

In recognition of newly introduced infrastructure upgrades, the 2016 f-factor scheme also applies more stringent performance benchmarks and reporting obligations.

Regulatory Impact Statement

The 2016 f-factor scheme places reporting obligations and an economic incentive on each distribution business to improve the bushfire safety from the operation of their networks and to optimize new enhanced protection technology.

Businesses will be incentivised to reduce every network ignition.

As part of the 2016 changes to the f-factor scheme, a Regulatory Impact Statement (RIS) was prepared to consider policy options with a view to maximise the efficiency of this  bushfire risk reduction incentive.

The RIS was open for public comment till 7 November 2016. Public submissions about the changes are published on this website unless otherwise stated not to.

f-factor Regulatory Impact Statement (PDF, 2.1 MB)
f-factor Regulatory Impact Statement (DOCX, 8.1 MB)

Public submissions

In October 2016, the Victorian Government released the f-factor Incentive Scheme Regulatory Impact Statement (RIS) for public consultation.

Consultation on the proposed f-factor scheme closed on 7 November 2016 with the receipt of four submissions:

Submission - AusNet Services (PDF, 754.4 KB)
Submission - United Energy (DOCX, 134.5 KB)
Submission - Jemena (DOCX, 154.9 KB)
Submission - CitiPower-Powercor (PDF, 930.1 KB)

The submissions received were taken into consideration as the government finalised the 2016 f-factor scheme. The views and opinions expressed within each submission belong solely to the author and are not endorsed by the Victorian Government or the Minister for Energy, Environment and Climate Change.

Statement of Reasons and Notice of Decision

The Statement of Reasons describes how each submission was considered, and how it influenced the final design of the Scheme.

f-factor Statement of Reasons (PDF, 211.8 KB)
f-factor Statement of Reasons  (DOCX, 76.6 KB)

On 14 December 2016, the Minister for Energy, Environment and Climate Change issued the attached Notice of Decision for the proposed f-factor Incentive Scheme 2016.

Notice of Decision (PDF, 23.6 KB)

Key Dates

December 2016: Notice of Decision issued

November 2016: Contributions to this consultation are closed for review and evaluation. Feedback will be incorporated into the drafting process

October 2016: Public consultation

Further information

Commissioner for Better Regulation - letter of adequacy (PDF, 103.3 KB)

f-factor Order in Council (PDF, 3.4 MB)

Consultation paper

Summary DNSP issues

Page last updated: 16/07/19