Bushfire class action sparks power giant’s cash grab

Bushfire class action sparks power giant’s cash grab

19 April 2013

published by www.dailytelegraph.com.au

Australia — A POWER giant could potentially push for hundreds of thousands of Victorians to pay higher electricity prices to cover the cost of Black Saturday bushfire class actions.
The Australian Energy Regulator has given distributor SP AusNet the right to apply to pass on unexpected costs exceeding insurance limits for events before 2011.

“This decision only gives SP AusNet an opportunity to apply to the AER to recover additional costs,” a final ruling released yesterday stressed.

“It does not mean SP AusNet will automatically receive any additional revenue.”

It is understood the company, which has 640,000 Victorian customers, is unlikely to be compensated if found at fault for the tragic February, 2009, blazes.

SP AusNet is fighting a $1 billion class action alleging poor maintenance was responsible for the Kilmore East Black Saturday fire that claimed 119 lives and more than 1200 houses.

The case is expected to continue until late this year.

Yesterday’s decision restored the right to try to claw back costs exceeding “efficient” insurance cover under previous arrangements set by Victoria’s Essential Services Commission. The AER is reviewing “pass through” costs for insurance events for future years.

SP AusNet spokesman Jonathon Geddes said that without a “pass through” option, utilities would be forced to take out excessive insurance for rare catastrophies, leading to even higher electricity prices every year.

Energy Minister Nicholas Kotsiras said the State Government would not support any outcome resulting in higher prices for damage due to negligence.

“In the event that there is an application in the future, the Government would strongly support the interest of Victorian consumers,” Mr Kotsiras said.

AER chairman Andrew Reeves said: “Our assessment of any cost pass through application would consider, amongst other things, the actions taken by SP Ausnet to manage their risks and to reduce the magnitude of the costs.

“We would also consider any court judgments or litigation settlements.”

Opposition energy spokeswoman Lily D’Ambrosio said the ability of profitable electricity companies to recover unexpected costs should be curtailed.

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