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, based on the timing and geographical location of network fire starts, which assists in the delivery of investment and operational improvements to the highest bushfire risk areas of the state.
The 2016 changes to the f-factor scheme are 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 imposes higher penalties or higher rewards for fires of greater risk.
In recognition of newly introduced infrastructure upgrades, such as Rapid Earth Fault Current Limiters, the 2016 f-factor scheme also applies more stringent performance benchmarks and reporting obligations.
Regulatory Impact Statement
As part of the 2016 changes to the f-factor scheme, a Regulatory Impact Statement (RIS) considered policy options to maximise the efficiency of this bushfire risk reduction incentive.
The RIS was open for public comment till 7 November 2016.
Further to the Regulatory Impact Statement, public comment and engagement with the electricity distribution businesses, Energy Save Victoria (ESV), and the Australian Energy Regulator (AER), the government finalised the 2016 f-factor Incentive Scheme.
On 14 December 2016, the Minister for Energy, Environment and Climate Change issued the attached Notice of Decision for the f-factor Incentive Scheme 2016.
Page last updated: 30/06/20