VICTORIANS may pay the cost of class actions against electricity company SP AusNet for its alleged role in sparking the Black Saturday bushfires — via higher electricity prices.
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SP AusNet is facing two class actions over its role in two deadly bushfires in February 2009: Kilmore East, which killed 119 people, and Murrindindi, which killed 40 people.
The Singapore-backed company, worth $3.5 billion, has already agreed to pay $19.7 million in response to a class action over the Beechworth bushfire.
A draft ruling by the Australian Energy Regulator this week opened the way for SP AusNet to pass on excess costs to its customers from the Kilmore East and Murrindindi fires which would mean any costs of the class actions not covered by its insurance.
State Energy Minister Michael O’Brien said the government was awaiting the regulator’s advice on the potential implications of its draft decision.
“As a matter of principle, the Victorian government would not support any regulatory action that resulted in bushfire victims paying for damage caused by their electricity network,” he said.
Policy director at the Consumer Action Law Centre Gerard Brody said such decisions were meant to be made with the long-term interests of consumers in mind.
“I’d say at first blush this sounds like it’s definitely got the interests of SP AusNet and their shareholders in mind, not consumers,” he said.
In instances such as catastrophic events beyond their control, electricity networks can request to pass on costs to their customers, to keep insurance costs under control.
This week’s draft ruling backdates the period for which SP AusNet can apply to “pass through” costs in the period 2006-10, taking in Black Saturday.
SP AusNet told shareholders this week that under the draft ruling, there “may be circumstances in which liability which exceeds insurance may be recovered by SP AusNet as regulated revenue”.
Shareholders liked the news, pushing SP AusNet’s shares up 4 per cent yesterday, but Lyn Gunter, the former mayor of fire-ravaged Murrindindi was “stunned”.
“There will be a backlash in Victoria, if not around Australia,” she said.
The regulator and SP AusNet have stressed the draft ruling has yet to be formalised and consultations will continue until September 12.
The decision follows a Victoria Police report to the state coroner that found SP AusNet’s electricity assets were likely to blame for the Murrindindi fire, which was originally considered suspicious and therefore not investigated by the Victorian Bushfires Royal Commission.
