Electricity provider Powercor believes it has new evidence it believes may convince regulatory authorities to approve a major upgrade of the electricity network in south-western Victoria.
Powercor has proposed an $8.7 million investment to upgrade more than 85km of the single-phase electricity network (SWER) to three phase power in Tyrendarra, Strathdownie, Cape Bridgewater and Gorae West.
Powercor General Manager, Corporate Affairs, Jo Pafumi told the Great South Coast Sustainable Energy Forum in Warrnambool the Australian Energy Regulator set the total amount of money an electricity network could recover from its consumers, over a five year-period, for network upgrades.
Ms Pafumi said the AER had rejected Powercor's plans for the $8.7m investment.
But Ms Pafumi said Powercor had since conducted research amongst almost 3,000 household and business customers, asking them to quantify the value they placed on further network improvements.
"What we found was customers are willing to pay more for improvements that are important to them," Ms Pafumi said.
Customers were also prepared to pay tor improvements to electricity reliability in communities outside their own, she said.
Powercor covers the western half of Victoria, with 843,525 customers from the south coast to Cobram and Mildura.
The AER assessed Powercor's investment proposals for the south-west through an economic lens and did not directly factor in the intrinsic value customers placed on services and expenditure, Ms Parfumi said.
"We believe the regulatory assessment framework should be reviewed and updated to keep pace with changing expectations," she said.
A Powercor spokesman said the company was also "highly supportive" of the community's work to seek alternative sources to upgrade the network and was continuing to look at ways to help them in those efforts.
Food & Fibre Great South Coast executive officer Natalie Collard said the group would now renew its campaign for an upgraded network.
It would focus on changing federal legislation, which governed the amount of money electricity providers could be spent on upgrades.
"The AER can only make energy investment decisions based on population density - regional communities will never be competitive, versus metropolitan communities, because the very definition of being regional means we have lower density," Ms Collard said.
She said it was costing some regional businesses $250,000 a year to run diesel generators.
Tyrendarra dairy farmer Bruce Knowles says he has a back-up generator, just in case his main one fails.
"It's just a matter of keep chipping away - there is no doubt about it, there is fantastic support for the three-phase power upgrades," Mr Knowles said.
"It comes back to the AER and that it discriminates against the regions in favor of the metropolitan areas, purely on financial grounds.
"There appears to be no long-term vision with the AER - at the end of the day it seems to be in a world of its own."
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But the AER said it did not reject Powercor's initial proposal.
The AER capped the amount of revenue operators could raise at a point it believed was "no more than necessary" for the distribution service to replace and maintain the poles and wires, the spokesman said.
In April, last year, the AER determined Powercor could recover $3.45 billion from its consumers over the 2021 - 2026 regulatory period, through every consumer's retail electricity bill.
"We had determined that the initial proposal required more evidence about broader market benefits of the project," the spokesman said.
"Where the benefits of a project are highly concentrated on a smaller number of customers, the AER must consider whether these costs should be cross-subsidised by all customers on the network, regardless of whether it is a rural infrastructure upgrade or an urban one."
The spokesman said Powercor could still consider other ways to fund the upgrade, including re-prioritising their existing expenditure program, co-funding with the state government, or seeking grant funding.
A spokesman for federal Energy Minister Chris Bowen said AER must consider whether costs for a particular project should be paid for by all customers on the network.
"While population density is a factor in determining prudent and efficient costs, it is not the only factor," the spokesman said.
The AER did not approve a capital expenditure allowance for the upgrade in its draft decision for Powercor, and Powercor did not re-propose the project in its revised proposal.
The spokesman said the criteria referred to was contained in the Regulatory Investment Test for Distribution (RIT-D), which was developed by the AER in accordance with the National Electricity Rules.
The federal government did not have plans to review the RIT-D.