1. What is the purpose of these regulations?
These regulations require electricity distribution networks in designated high bushfire risk areas to operate to heightened safety standards. To meet these heightened standards network operators will need to roll out a large number of assets.
2. Haven't we already met all the recommendations of the Victorian Bushfires Royal Commission?
The Royal Commission made a total of eight recommendations regarding electricity assets. To date seven of these have been fully met. The remaining one –Recommendation 27 –referred to the replacement of existing powerlines with new, safer assets. This recommendation has been partially met to date through Government-funded powerline replacement. But only now, with the introduction of these regulations, is this recommendation being fully met.
3. Hasn't the Government already paid for powerline replacement with the $200 million Powerline Replacement Fund?
In 2013 the Government commenced fulfilling the Royal Commission's Recommendation 27 with the $200 million Powerline Replacement Fund, or PRF. While $200 million appears generous, it is only enough to replace a small percentage of the State's powerlines. Consequently the PRF has been used to target immediate replacement of bare-wire powerlines in the highest consequence areas of the State, such as the Dandenongs, Yarra Valley and Otways.
There are however extensive further areas of the State which warrant replacement of bare-wire powerlines. In these areas businesses will now be required to replace bare-wire overhead powerlines with underground or covered conductor, once they reach the end of their useful lives.
This is expected to take place in stages over the coming decades. While this is a relatively slow deployment compared to that achieved through the PRF, it has the effect of minimising the cost impact to customers.
4. Why don't businesses do this on their own? Why do they need to be made to do it?
Electricity distribution businesses have started rolling out some of these assets. However these businesses face competing priorities for a limited pool of capital. If left on their own it would take considerably longer for the businesses to deploy the new assets; and replacement of existing assets to higher standards may not occur.
The national economic regulator, the Australian Energy Regulator (AER) is responsible for approving how much money monopoly network businesses can recover from consumers. By enacting a regulatory requirement, the Victorian Government effectively informs the AER that it is justified in allowing businesses to recover additional costs from consumers to fund these enhanced assets.
5. Why should consumers pay for this?
All capital and operational expenditure of electricity distribution businesses is recovered from consumers. It is an accepted principle of economic regulation that the efficient costs of running a business be recovered from users or beneficiaries of that business. This is the basis on which the Australian Energy Regulator allows costs to be passed on to consumers.
6. Why are only AusNet and Powercor customers paying for this?
The Government has recognised the need for all Victorians to contribute to powerline bushfire risk reduction. For this reason it committed $250 million in public funds for the Powerline Bushfire Safety Program. This funding has enabled research and development of technologies such as REFCLs, installation of backup generators for the most vulnerable Victorians, and targeted and immediate replacement of powerlines under the Powerline Replacement Fund.
It is essential however that individual electricity businesses retain commercial and legal responsibility for reducing risks to the community arising from their own operations. As bushfire risk does not evenly distribute itself across the state, this inevitably means some businesses will have higher bushfire mitigation costs – and these costs will be reflected in their tariffs.
If the Government were to attempt to regulate into existence a cross-subsidy scheme between electricity distributors, it would erode their incentives to meet regulatory requirements in the most efficient manner possible, and would allow them to transfer risk for compliance failures.
7. How much more will I pay, and when?
The average household, using approximately 5,000 kilowatt hours a year, can expect to pay $22-$30 more per year in the AusNet area, $14-$17 more per year in the Powercor area and $0.22 per year in the Jemena area. These costs will appear gradually, over the space of seven years as assets are deployed.
8. Where are these assets being deployed?
REFCLs will be deployed at major electrical installations, servicing 53 of the state's 79 local government areas.
SWER ACRs have already been deployed across much of the state, so these regulations will see them deployed to remaining areas in the Mallee and Wimmera.
Powerlines will be replaced with underground and covered conductor in select locations in 19 of the state's 79 local government areas including Alpine; Ballarat; Baw Baw; Colac-Otway; Corrangamite; East Gippsland; Greater Bendigo; Greater Shepparton; Indigo; Loddon; Macedon Ranges; Mansfield; Mitchell; Mount Alexander; Murrindindi, Nillumbik; Pyrennes; Surf Coast; and Yarra Ranges.
9. My area is a high bushfire risk area but isn't being targeted for asset deployment. Why?
All bushfire-prone areas of Victoria are being protected from bushfire risk. The Victorian Government and electricity distribution businesses have undertaken a range of activities in response to the 2009 Victorian Bushfires Royal Commission, which comprehensively address risk across the entire state.
New generation ACRs have already deployed to large areas prior to these regulations being made. Spreaders and dampers, have been installed across the state, as has improved vegetation management, and more frequent inspection cycles. Backup generators have been installed in 41 of the State's 79 local government areas, providing critical power supply to the most vulnerable Victorians.
The assets linked to the Electricity Safety (Bushfire Mitigation) Amendment Regulations 2016 are targeted to those areas of particularly high risk due to a combination of factors including typical fuel load, ease of access, and population levels.
10. Does this mean that we won't have to cut back trees any more to maintain easements?
No. Vegetation management will remain an important part of the state's suite of measures to reduce powerline bushfire risk. In areas where powerlines are placed underground however further vegetation clearance will not be necessary.
11. Don't the electricity distribution businesses save money by not having to replace or maintain powerlines that are now underground?
They do. The cost savings to business have been taken into account in the Government's regulatory impact statement. There is however still a net cost to businesses as the cost of undergrounding or covering conductor is significantly more than simply replacing like-for-like with new overhead conductor.
12. I'm on a solar tariff. Will this affect me differently?
It shouldn't. The Australian Energy Regulator will allow electricity distribution businesses to recover the efficient costs of complying with these regulations. These costs will then be apportioned by the businesses across all its tariff classes. This cost recovery should not discriminate based on a customer having solar.
13. I'm on a time of use tariff. Will this affect me differently?
It shouldn't. The Australian Energy Regulator will allow electricity distribution businesses to recover the efficient costs of complying with these regulations. These costs will then be apportioned by the businesses across all its tariff classes. This cost recovery should not discriminate based on a customer having a time-of-use tariff.
14. My business is located in one of the priority areas for deployment and has high voltage electrical equipment. How will I be affected?
If you own assets which connect directly to the 22kV feeder, rather than through a transformer, and you are located in one of the areas for REFCL deployment, you may need to modify these assets. Your network distribution business will be in contact if you might be affected by the change.
15. Can I avoid these costs by switching retailers?
No. The costs in question will be recovered by your electricity distributor. You have no choice in who your distributor is – they are monopoly service providers in a given geographical area. The bills you pay to your retailer include costs charged by the local distributor to your retailer, in providing network services. Any retailer who is servicing your geographical area will have to pay the same charges.
16. How do we know these REFCLs can prevent bushfires?
Victoria has invested $5.5 million in three separate technology trials over the 2014-15 period. These technology trials comprised over 2,000 separate tests at three separate locations, and involved electricity distributors, equipment suppliers and independent experts in electricity network protection technologies.
The trials determined what performance specifications are required to prevent ignition in the event of phase-to-earth faults (the type of fault which causes the most bushfires); and that a technology is available which can meet these specifications.
In summary, REFCLs will be 10 to 12 times more effective in reducing bushfire risk than existing best practice.
17. How do we know REFCLs won't damage electricity networks in ways unrelated to bushfire?
REFCLs have been successfully deployed internationally – including 28 units deployed in New Zealand in recent years. In addition, United Energy a have successfully installed and operated a REFCL unit at Frankston. The United Energy and New Zealand experience demonstrates that these devices have been successfully integrated without damaging existing networks.
18. How has the Government calculated bushfire risk?
The Government commissioned modelling by the University of Melbourne, and CSIRO.
The University of Melbourne work determined the expected consequence (impacts on human life and property) of bushfires started at thousands of different potential points on the electricity distribution network.
CSIRO's work determined the likelihood of such ignitions, and the extent to which these would be reduced based on the known capability of different technologies (REFCLs, ACRs, powerline replacement). The likelihood times consequence yielded a risk rating for each point on the network.
19. Why don't we just underground everything?
Cost. The 2011 Powerline Bushfire Safety Taskforce inquired into this option, and found it would cost up to $40 billion to underground all the powerlines in the state. This is far in excess of what electricity consumers would be willing to pay for improved bushfire safety. It is also unnecessary, given the capability of new technologies to prevent ignition on large areas of the network.
The package of assets captured in the Regulations represents the most cost-effective way to roughly halve Victoria's powerline bushfire risk.
20. Why not put in more than 45 REFCLs?
The costs of REFCLs varies by location but averages around $6-7 million. These costs are not trivial. Consequently the Government has relied on a principle of yielding the maximum risk reduction benefit for the least amount of money in selecting the particular 45 locations it has. The 45 REFCLs chosen will deliver 90% of the potential bushfire risk reduction which REFCLs are capable of achieving.
21. What relief is available for customers unable to pay these sort of costs?
The Government is taking a number of steps to ease energy costs to Victorians.
The $145 million Annual Electricity Concession program provides ways to assist the most vulnerable to relieve cost of living pressures by providing concession cardholders with a discount of 17.5 per cent off household electricity bills.
By using the Victorian Energy Compare website customers can select the tariff that saves them the most money, based on the data supplied by their smart meters. At present, it has been determined that 95 per cent of users can save money by switching plan – and more than half can save more than $340 per year.
Energy efficiency initiatives such as the Victorian Energy Efficiency Target (VEET) support the uptake of energy efficiency activities by Victorian households and businesses which can lead to significant savings on energy bills.
Page last updated: 09/06/17