REFCL & HCAP FAQs

ContentsWhat is the Powerline Bushfire Safety Program?..............................................................................2

Why are REFCLs being installed?.......................................................................................................2

How does a REFCL work?...................................................................................................................3

How do REFCL operations affect HVCs?.............................................................................................3

What are the options available to HVCs to deal with REFCL over-voltages?.....................................4

When do HVCs need to be REFCL ready?..........................................................................................4

Which substations will have REFCLs installed and operating?...........................................................5

Why am I in tranche two and not in tranche one?............................................................................5

What do HVCs need to do? Who do they contact?...........................................................................6

Is there a list of qualified consultants who can conduct a REFCL impact assessment on the network?...........................................................................................................................................6

My preferred solution is isolation. What does an HVC need to do to organise a quote?..................7

Is it true an isolation transformer will consume about 10 per cent of my electricity supplied, causing me to use more electricity and incur higher operating costs?..............................................7

My preferred solution is asset hardening. What does an HVC need to do to organise a quote?......7

What happens if HVCs don’t prepare their sub-network for REFCL operations?...............................8

Why do HVCs have to pay for REFCL readiness work?.......................................................................8

How much is this going to cost?........................................................................................................8

What consideration is being made to help Victorian businesses make their network REFCL ready? 9

What is the HCAP?.............................................................................................................................9

What will the HCAP cover?................................................................................................................9

Am I eligible for funding assistance to ready my high voltage network for REFCL operation?........10

How do HVCs apply for HCAP funding?...........................................................................................11

When do HCAP applications need to be submitted?.......................................................................11

Can HVCs still apply if they miss the application deadline?.............................................................11

How and when will HVCs know if their applications are successful?...............................................12

How much funding will the HCAP provide; how will HCAP funding be distributed?........................12

Will HCAP funding be conditional?..................................................................................................13

When will the funds be provided? Can HVCs get it sooner?............................................................13

At the application stage, I only have an estimated cost of REFCL works. Can this be used?...........14

What happens if the REFCL-readiness works cost more than was estimated?................................14

What if I have not received an HCAP application pack?..................................................................14

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Will there be disruptions to my business as part of REFCL-readiness works?.................................14

Will the broader local community be affected by installation of the REFCLs?.................................15

Acronyms

DBs – electricity distribution business (ie, AusNet, Powercor or Jemena)

DELWP – Department of Environment, Land, Water and Planning

ESV – Energy Safe Victoria

ESC – Essential Services Commission Victoria

HBRA – Hazardous Bushfire Risk Area

HCAP – High Voltage Customer Assistance Program

HVC – High Voltage Customer

PBSP – Powerline Bushfire Safety Program

REFCL – Rapid Earth Fault Current Limiter

ZSS – Zone Substation

What is the Powerline Bushfire Safety Program?

Following the devastating bushfires of Black Saturday in 2009, the Victorian Government established the Victorian Bushfires Royal Commission to consider how bushfires can be better prevented and managed in the future.

The Commission observed that powerlines and electricity infrastructure caused many of the major bushfires in 2009 (and contributed to 159 of the 173 bushfire-related deaths), as well as earlier major bushfires.

The Powerline Bushfire Safety Program (PBSP) was established to manage a $750 million program of works to deliver improved electricity assets and controls to reduce the likelihood that Victorian powerlines will be the cause of catastrophic bushfires in the future. One third of this program ($250 million) was funded by the Victorian Government, primarily to replace high risk overhead powerlines. Electricity distribution businesses are providing approximately another $500 million worth of work to PBSP, chiefly through the installation of enhanced powerline fault detection and suppression capabilities at 45 zone substations (ZSS) in hazardous bushfire risk areas. These capabilities are being delivered through the installation of Rapid Earth Fault Current Limiters (REFCLs).

Why are REFCLs being installed?

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REFCLs are a class of technology used primarily for supply reliability outside of Australia. REFCLs are being installed in Victoria as a world-first use of this technology to lower the risk of powerline faults starting bushfires. Testing of REFCLs at the Frankston and Kilmore South ZSSs, simulating worst-case bushfire conditions, demonstrated REFCLs’ potential to prevent faults on 22kV powerlines from starting bushfires.

On 1 May 2016, the Victorian Government introduced legislation mandating that three electricity distribution businesses (DBs) – AusNet Services, Powercor and Jemena – must deploy the enhanced fault detection and suppression capabilities that REFCLs can provide at 45 ZSSs located in hazardous bushfire risk areas. REFCLs are being installed in three phases (or “tranches”), with roughly one-third of the 45 substations operational by 30 April 2019, roughly another third by 30 April 2021, and the final third in operation by 30 April 2023. When this program is complete, REFCLs are expected to provide at least a 60% reduction in risk on over 30,000 km of multi-wire, high-voltage powerlines (or more than half the State’s high-voltage distribution lines).

How does a REFCL work?

A REFCL operates on polyphase, high-voltage powerlines, that is powerlines with three wires. REFCLs can detect single phase-to-earth faults, that is when one of the three wires on a powerline comes in contact with the ground or with an object connected to the ground, such as a tree branch. The REFCL can detect the fault and reduce the voltage on the faulted phase to a very low level within two seconds or less. This is how a REFCL substantially reduces the likelihood of a fire starting.

Unlike standard powerline technology, REFCLs allow the electricity distribution system to continue operating for a short time rather than cutting power off altogether when a fault is detected. This allows for unnecessary downstream power outages to be avoided if the fault is temporary. If the fault persists, the REFCL then shuts down the power to the affected lines. But this aspect of a REFCL’s operation also means that the two, non-faulted wires are receiving significantly more voltage than normal during these brief, over-voltage conditions. Such over-voltages can have a negative effect on an HVC’s electrical equipment and installations if not properly assessed and modified where necessary.

How do REFCL operations affect HVCs?

During REFCL operations, the voltage on the non-faulted wires increases up to 1.9 times the nominal voltage, ie, up to 24.2 kilovolts, for brief periods of usually no more than a minute. There is a substantial risk that such over-voltages may cause an HVC’s equipment and sub-network to fail unless the HVC takes action to assess its equipment and private electric lines to ensure they can operate in REFCL-related over-voltages. If HVCs don’t take such action prior to a REFCL being put into service, there’s a chance their electrical assets will fail, with consequent risks to employee safety, business interruptions, and even resulting in bushfire-causing faults elsewhere on the DB’s network.

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What are the options available to HVCs to deal with REFCL over-voltages?

HVCs have several possible options for modifying their electrical assets or operations to avoid or reduce the risk of damage to their equipment and sub-networks from REFCL-related over-voltages:

they can “harden” their existing assets, assessing their equipment and replacing any that is not capable of operating during REFCL-related over-voltages with equipment rated to operate safely at such voltages (ie. up to 24.2kV for less than one minute except when per phase stress testing is underway, when over-voltages may occur for up to ten minutes);

HVCs can “isolate” their assets from the REFCL-controlled distributor’s supply network by installing isolating transformers that isolate the higher voltages during REFCL operation from the HVC’s equipment and powerlines;

depending on the size of an HVC’s electrical load, the HVC can “convert” its power supply to low voltage service (<1,000 volts), meaning the HVC ceases taking electricity directly from the electricity distributor’s high-voltage line and instead takes power that has been stepped-down by the distributor’s transformer; or

likewise depending on an HVC’s electrical needs, it could “convert” its power supply to a higher voltage service (eg, by connecting directly to the 66kV transmission system, which is not subject to REFCL operation).

HVCs considering converting to a low voltage service need to consider the impact of different rates in the distributor’s electricity tariff, as well as the capital costs of connecting to the distributor’s low voltage network.

When do HVCs need to be REFCL ready?

In the May 2016 legislation, the Victorian Government mandated that enhanced fault detection and suppression standards (“required capacity”) must be met by DBs for 45 ZSSs around Victoria in three phases (“tranches”) as set out in the table below. DBs are deploying REFCLs to meet the legislated standards. Each tranche has a different date by which legislation mandates the enhanced standards must be met.

Tranche Operational date1 30 April 20192 30 April 20213 30 April 2023

DBs are installing REFCLs according to their own timetables intended to meet the legislated deadlines. HVCs will need to ensure their equipment and sub-networks are REFCL ready to meet their DB’s timetable well before the date the DB plans to make each ZSS’s REFCL operational. This allows sufficient time for testing and compliance works that DBs must do before putting the REFCLs

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in service. Likewise, an HVC will need to test its own equipment and sub-network to ensure that they can withstand REFCL-related over-voltages well before the ZSS’s REFCL becomes operational.

Assuming it has not previously done so, each HVC needs to contact its DB to determine the tranche and specific REFCL installation date that applies to it.

Which substations will have REFCLs installed and operating?

The May 2016 legislation mandates that DBs provide “required capacity” (that is, meet enhanced fault detection and suppression standards) at 45 zone substations located in high bushfire risk areas. DBs are providing required capacity by installing REFCLs at specific substations. The specific ZSSs mandated to provide required capacity by no later than 30 April 2023 are:

ZSS Name ZSS Code Points

ZSS Name ZSS Code Points

Winchelsea WIN 5 Kilmore South KMS 3Colac CLC 5 Kalkallo KLO 3Eaglehawk EHK 5 Gisborne GSB 3Woori Yallock WYK 5 Belgrave BGE 3Maryborough MRO 5 Moe MOE 3Seymour SMR 5 Mansfield MSD 2Ballarat South BAS 5 Ferntree Gully FGY 2Bendigo TS BET 5 Eltham ELM 2Wangaratta WN 5 Ringwood North RWN 2Castlemaine CMN 4 Charlton CTN 2Camperdown CDN 4 Benalla BN 2Woodend WND 4 Koroit KRT 2Kinglake KLK 4 Hamilton HTN 2Rubicon A ALA, MVE 4 Terang TRG 2Bairnsdale BDL 4 Merbein MBN 1Geelong GL 4 Stawell STL 1Ballarat BAN 4 Bendigo BGO 1Waurn Ponds WPD 4 Ararat ART 1Lilydale LDL 3 Coolaroo COO 1Wodonga and Tallangatta WOTS 3 Corio CRO 1Myrtleford MYT 3 Lang Lang LLG 1Barnawartha BWA 3 Wonthaggi WGI 1Sale SLE 3

Why am I in tranche two and not in tranche one?

The legislation does not specify which zone substations – or the HVCs served by those substations – are in any particular tranche. Instead, as shown in the table above, the legislation allocates “points” to each of the 45 zone substations prescribed to deliver the “required capacity” provided by REFCLs. These points were based on the bushfire risk profile of all the powerline feeders originating from that substation (in other words, the points system is not focused on the risk profiles of HVCs). For example, the Eaglehawk zone substation’s feeders presented a higher bushfire risk profile and justified assigning the substation 5 points; the Barnawatha substation’s feeders presented a lower bushfire risk and 3 points were allocated to the substation; and a lower risk substation like

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Wonthaggi was considered worth only 1 point. For tranche one, the distribution businesses must ensure that a total number of zone substations equalling 30 points are delivering “required capacity” (ie, have REFCLs fully operational by 1 May 2019), another 25 points by 1 May 2021 and all 45 zone substations by 1 May 2023. The distribution businesses pick which zone substations to “contribute” to meet their points totals for each particular tranche; the allocation of zone substations into tranches is entirely at the discretion of the distribution businesses and is based on their operational and technical considerations.

When the distribution businesses selected zone substations to allocate to tranche one, the Electricity Distribution Code had not yet been amended to clarify that HVCs were responsible – operationally and financially – for taking steps to ensure that their electrical assets were capable of working safely and reliably during REFCL-related over-voltage conditions.

What do HVCs need to do? Who do they contact?

The first thing an HVC needs to do is to conduct an assessment and audit of your HV equipment and powerlines to determine if they are REFCL ready (that is, capable of operating safely and reliably during REFCL-related over-voltages). If an HVC has not already done so, we strongly recommend that you commence this process as soon as possible (even if you are in the later tranche three); the completion of a REFCL impact assessment is required for any eligible HVC wishing to apply for financial assistance from the HCAP. In addition, your DB, as well as ESV, will be able to provide you with technical advice on compliance.

For further assistance, HVCs are urged to contact their relevant DB and/or ESV. The DBs will work with you – or your consultant – to help you determine which solution is the most appropriate based on your electrical assets, business needs, risk profile and cost capacity. ESV can advise you what actions you will need to take in order to obtain any necessary regulatory approvals. In addition, DELWP’s Powerline Bushfire Safety Program (PBSP) team can try to facilitate an HVC’s communications with these bodies. Please note that your DB and ESV will not be able to recommend the best solution for you. That is a decision that the HVC must make.

Is there a list of qualified consultants who can conduct a REFCL impact assessment on the network?

Yes. If an HV Customer does not have the in-house capability for undertaking a REFCL impact assessment, there are several companies that DELWP understands are capable of providing such services. These include: AECOM, Aurecon, Daly Engineering, GHD, Jacobs Engineering Group, Middleton Group and Energy Transfer Solutions. Please note, however, that DELWP is neither endorsing nor recommending any particular consultant, nor indicating that other firms are not capable of delivering these services.

A REFCL impact assessment is typically a staged process. It often involves first, a desktop assessment to determine hardening feasibility. Next, if feasible, the assessment includes stress testing of the assets to confirm this.

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For further assistance, HVCs are encouraged to contact their relevant DB and/or ESV. The DBs will work with you – or your consultant – to help you determine which solution is the most appropriate based on your electrical assets, business needs, risk profile and cost capacity. ESV will be able to provide you with technical and regulatory advice on compliance.

My preferred solution is isolation. What does an HVC need to do to organise a quote?

An HV Customer should contact its DB’s REFCL program director for more information related to suppliers of appropriate isolating transformers. For each DB, these persons are: Peter Alexopoulos at HVCustomer@ausnetservices.com.au (AusNet Services), Richard Scholten at rscholten@powercor.com.au (Powercor) or Din Mafaakher at Din.Mafaakher@jemena.com.au (Jemena).

If an HV Customer’s DB is AusNet Services, it may be able to leverage AusNet’s suppliers of isolating transformers.

If the HVC’s serving DB is Powercor or Jemena, it should contact suppliers of isolating transformers directly. One company that the distribution businesses have used for this purpose is ABB Transformers.

DELWP hopes to be able to provide additional supplier information for HVCs in the future.

Is it true an isolation transformer will consume about 10 per cent of my electricity supplied, causing me to use more electricity and incur higher operating costs?

No. While some HVCs have advised DELWP that they understand that an isolation transformer, once installed, will consume about 10 per cent of the electricity supplied to the HVC (meaning the HVC’s electricity demand – and supply costs – will go up). DELWP has consulted both AusNet and Middleton Group and been advised that this concern is unfounded. DELWP understands that installation of isolation transformers may result in some energy loss due to a combination of core and winding losses. Assuming the HVC’s electricity demand remains constant, it will use slightly more electricity if it installs an isolation transformer and this will result in slightly higher electricity usage charges that the HVC will need to pay. However, DELWP understands that this loss is much less than 10 per cent – that such energy loss is more likely to be in the range of 0.6 per cent to 2 per cent at most. The amount of energy consumed by the isolation transformer will depend on the transformer purchased and should be reflected in the manufacturer’s documents.

My preferred solution is asset hardening. What does an HVC need to do to organise a quote?

An HV Customer should use its own electrical specialists or expert consultants to advise it of suppliers of electrical equipment appropriately rated to operate reliably and safely under the over-voltage conditions associated with REFCL operation. Over-voltages associated with REFCL operation

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may increase to 24.2 kV (90% or more than normal voltage on the line) for brief periods of usually a minute or less. An HVC’s DB may be able to assist it in this process as well.

What happens if HVCs don’t prepare their sub-network for REFCL operations?

The Electricity Distribution Code amendments adopted by the ESC in August 2018 make it clear that it is an HVC’s responsibility – financially and operationally – to ready its network for REFCL operation.

When an over-voltage occurs due to REFCL operation (ie. when a fault is detected or even during REFCL testing), your high voltage network may be damaged or impaired. This may result in loss or damage to your equipment, premises or business.

Failure to make your equipment and sub-network REFCL ready may result in the REFCL not operating correctly on all the powerlines connected to the serving ZSS. This would effectively mean that there will be no reduction in bushfire risk to the local community: The risk profile associated with the feeders connected to the ZSS you are supplied from will be exactly the same as if a REFCL had not been installed. In addition, there is some risk that faults occurring on a non-isolated, non-compliant HVC’s sub-network could cause a fire, not only on the HV Customer’s system but potentially on the DB’s “upstream” supply network. None of the parties charged with implementing the Powerline Bushfire Safety Program are likely to tolerate such situations.

In addition, as the agency responsible for powerline safety, ESV has the authority to direct the DB to isolate or oven disconnect an HVC if the HV Customer’s electrical assets present an unacceptable risk of harm to the HVC’s employees or others, or of damage to the distribution supply network or other electricity customers. Such action may be taken regardless of whether it occurs on a Code Red or Total Fire Ban day.

Why do HVCs have to pay for REFCL readiness work?

The August 2018 amendments to the Electricity Code make it clear that full responsibility for ensuring an HVC’s electrical assets are REFCL-ready, and remain so, falls on the HVC. This ruling also means that the costs cannot be passed onto consumers by the DB’s. Recognising the burden this is likely to impose on HVCs, the Government has established a $10 million grant scheme to help private companies bear some of the costs associated with REFCL compliance. However, the benefits of reduced bushfire risk across the entire community mu st be weighed against these costs.

How much is this going to cost?

Without undertaking a REFCL impact assessment, it’s impossible to estimate an HV Customer’s costs to become REFCL ready. The cost of becoming REFCL ready depends on the solution chosen – which is a business decision – as well as the type, age, condition, etc of an HV Customer’s electrical assets.

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That said, the PBSP team can provide some broad estimates based on the information we’ve gleaned from distribution businesses’ public filings and HV Customer consultants’ reports. From this data:

An “LV conversion” solution could cost in the range of $80,000. The cost of implementing an “isolation” solution is likely to range in cost from $500,000 to

over $1,000,000 (for labour and materials associated with each isolating transformer) but may increase if the HVC’s energy needs require more than one isolating transformer to be installed.

For a “hardening” solution, it is not possible to provide a ready estimate as the range of costs varies from site to site and depends on the type, age, condition, etc of an HV Customer’s electrical assets, as well as the HV Customer’s access to suppliers. The PBSP has seen hardening solutions proposed for as little as $30,000 for a site, while others have ranged up to $2 million or more.

What consideration is being made to help Victorian businesses make their network REFCL ready?

The Victorian Government recognises that HVCs may incur a substantial cost to become REFCL ready. In particular, commercial enterprises that are subject to the pressures of a competitive market for their goods and services may find it difficult to absorb the costs of making their electrical assets REFCL-ready. To relieve some of the burden on such HV Customers, the Government has committed $10 million to a High Voltage Customer Assistance Program (HCAP) designed to assist HVCs with part of the costs associated with the REFCL works. Depending on the solution selected by the HV Customer and such things as the type, age, condition, etc of its electrical assets, grants from the HCAP may cover up to 50% of an HVC’s REFCL-readiness costs.

What is the HCAP?

The HCAP is a $10 million fund that will provide financial assistance to private sector HVCs in the form of grants. These funds will be capped and contribute up to 50% towards the actual cost of works for an HVC’s chosen solution, whether that be low voltage (LV) conversion, hardening or isolation. The capped amount will be determined by the number of successful applicants but is expected to be in the range of $220,000 to $250,000 per customer site (some HVCs operate more than one site or have more than one connection to the DB’s high-voltage supply network).

The amount of HCAP assistance an HVC receives will not include any consideration of the HVC’s cost of the technical assessment or analysis used in determining the HV Customer’s preferred solution.

Those HVCs deemed eligible for HCAP funding will be sent an application pack by the Department of Environment, Land, Water and Planning within a few days after the ESC issues its final decision amending the Code.

What will the HCAP cover?

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The fund will only cover those costs directly related to the HVC’s implementation of its REFCL-ready solution; that is LV conversion, hardening or isolation. This includes procurement of equipment, system design, and compliance works.

Grants from the HCAP will not cover any costs associated with the following:

Initial assessment and audit of electrical equipment to determine if it is REFCL ready Any costs associated with determining what the REFCL-ready solution will be (other than

costs related to solution design); Any other preparation works not directly related to the implementation of the REFCL-ready

solution; Consultancy fees associated with the foregoing activities; The purchase of land; Routine or ongoing maintenance activities; Recurrent operating costs, for example rent and utility costs, and/or activities establishing

expectations of ongoing funding; Any downtime or loss of production time resulting from the testing or implementation of the

REFCL-ready solution; or Any asset upgrades or network changes not required for REFCL-readiness.

DELWP’s PBSP team has been delegated the authority to determine, in its discretion, what the HCAP does, or does not cover. The PBSP team is, however, consulting with relevant stakeholders to inform its discretion.

Am I eligible for funding assistance to ready my high voltage network for REFCL operation?

The ESC has concluded that HV Customers are responsible for readying their assets and sub-networks to operate safely and reliably during over-voltage conditions associated with REFCLs operating. This includes responsibility for any associated costs. However, the Victorian Government understands the financial impact this work may have on an HV Customer’s business and is providing financial and other assistance to HVCs under the HCAP scheme.

If you are a sole trader, private or publicly listed company (ie. not Government owned) or trust that operates a business and have been identified as having a high voltage network that will be affected by a REFCL for tranche two (30 April 2021 deadline) or tranche three (30 April 2023 deadline), you are eligible for financial assistance from the Government’s HCAP scheme.

Eligible HVCs will be sent an application pack by DELWP within a few days of the ESC’s finalisation of the Electricity Distribution Code, expected in mid-August 2018.

Unfortunately, if you are a Commonwealth, state or local government directly-owned entity, or an electricity distribution business, you will not be eligible for financial assistance from the HCAP. However, the PBSP team is actively searching for other forms of financial assistance that may be available to HVCs that are not eligible for HCAP funding.

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In addition, the PBSP team is working to develop other, non-financial assistance that can be provided to all HV Customers.

How do HVCs apply for HCAP funding?

As a first step you will need to undertake a REFCL impact assessment to determine if your sub-network is REFCL ready. If it’s not ready, you will need to determine the most appropriate solution.

Conversion to low voltage service is the simplest and cheapest but may not be appropriate for your business’s energy needs.

Hardening your sub-network could also be an option. This solution will vary greatly in cost depending on the age and condition of your network.

The third option is the installation of an isolating transformer which will isolate your sub-network from the REFCL. This varies greatly in cost between $500,000 and potentially up to $2 million or more for complex sites.

Once you have determined the solution and obtained a quote (or estimate), and reviewed your proposed solution with your DB, you will need to complete the application form, provide the required supporting documentation and reports and submit them – electronically only (no hard copies) – to DELWP’s PBSP team by the due date. Applications are made via an online portal only and those eligible parties will be sent the link as part of their application pack. The application is accessed via https://delwp1.force.com/publicform?id=a0h0B00001R4Jvm . Please make sure you complete all information and provide the documentation, as failure to do so will delay assessment and put you at risk of missing out on HCAP funds. If you save an application as draft, to easily access it later use the following link, https://delwp1.force.com.

When do HCAP applications need to be submitted?

All applications through the online portal must be received by DELWP’s PBSP by 11:59pm, Wednesday, 20 February 2019.

This date has been selected as it is considered to provide good balance between allowing enough time after the HCAP’s release for HVCs to conduct their initial assessment of their network and arrive at a recommended solution, but also enough time to allow for the funds to be released as early as possible to help with HVCs’ cost of works to become REFCL ready.

An HVC may apply for HCAP funding any time before 20 February 2019 but will not receive a funding agreement before 21 February 2019. The funding agreement will provide a link to the terms and conditions governing the grant, should the HVC accept the offered agreement. An HVC thus will not receive any HCAP funds any earlier than 21 February 2019.

Can HVCs still apply if they miss the application deadline?

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No. All applications must be submitted to DELWP by the due date in order to enable DELWP’s PBSP team to determine funding and capped amounts. So long as an application is substantially complete, the HVC will be deemed to have applied by the deadline.

How and when will HVCs know if their applications are successful?

The PBSP will issue funding agreements to all successful tranche two and tranche three HCAP applicants, which will indicate the funding amount each HVC is entitled to receive. The funding agreements will incorporate terms and conditions of the grant, which the HVC must review and agree to as a condition of receiving HCAP funding.

These funding agreements will not be issued to HVCs before 21 February 2019 and the initial 30% instalment of grant funds will be distributed shortly after DELWP’s PBSP team receives the HVC’s signed funding agreement.

How much funding will the HCAP provide; how will HCAP funding be distributed?

Grants from the HCAP will contribute 50% towards the total cost of an HV Customer’s preferred solution, capped at a certain amount. We won’t know what the capped amount is until we have received and processed all HCAP applications; however, current analysis indicates that assistance will be in the area of $220,000 to $250,000.

It is important to note that the HCAP funding provided to an HVC will be limited, up to 50% of the HVC’s actual costs incurred or the calculated cap.

For example, HVC A has applied for HCAP funding for a hardening solution which it estimates will cost $80,000 ± 30% (that is, $56,000 to $104,000). The PBSP team will base the calculated maximum HCAP support using the upper estimated amount, ie. $104,000. HVC A will be offered HCAP funding of up to $52,000 to implement its solution (50% of $104,000).

Grants from the HCAP will be released in two instalments. The first instalment, issued shortly after DELWP’s receipt of the HVC’s signed funding agreement, will be set at 30% of the approved funding level. In our HVC A example above, the first instalment of HCAP funding (30% of the approved funding level – or $15,600) will be based on this estimate. The second instalment of HCAP funding – up to 70% of the approved funding level, will be issued within 30 days of DELWP’s receipt of notice of the HVC’s satisfactory completion of REFCL-readiness works.

Depending on the actual cost of works, the second instalment may actually be less than 70% of the original, approved funding level. Taking our HVC A example, assume that once all works have been completed to harden HVC A’s electrical assets, the actual total cost turns out to have been $86,000 ($18,000 less than the upper estimate that the approved funding level was calculated on). The final payment to HVC A will be based on a funding level of 50% of the HV Customer’s actual – not estimated – cost, in this case $43,000 (50% of $86,000). The final release of funds from the HCAP will be $27,400 ($43,000 - $15,600) rather than the $36,400 that would have been due based on the original estimated cost ($52,000 - $15,600).

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Evidence of payments/fixed price quotes for the actual costs directly related to REFCL-readiness works, as well as confirmation from the DB and/or ESV that the HVC’s solution has been satisfactorily implemented, must be provided before DELWP’s PBSP team will process an HVC’s second and final instalment of HCAP funding.

Will HCAP funding be conditional?

The first 30% instalment of HCAP funding will not be conditional but the 70% balance payment may be adjusted in several respects.

First, as noted in these FAQs, the final instalment will be based on the HVC’s actual cost of REFCL-ready works; if the actual cost is less than the estimated cost, the HVC will receive a smaller sum based on the lower, actual cost.

Second, if the HVC fails to complete its works by the date the DB has scheduled its zone substation to have an operational REFCL in place, the final 70% payment may be reduced. An HVC’s failure to meet the DB’s schedule of substation works may attract a penalty in the form of a percentage reduction to its final HCAP instalment. Moreover, it is expected that the percentage reduction will increase with the passage of time and could, conceivably, result in the final instalment being reduced to zero if the HVC fails to complete its works by the legislated tranche deadline.

The key point, however, is that HVCs are incentivised to expeditiously complete their REFCL-readiness works in order to facilitate DBs’ roll-out of zone substations capable of meeting the legislated enhanced fault detection and suppression standards before the tranche two and tranche three deadlines.

Any other conditions on HCAP grants will be spelled out in the funding agreement or terms and conditions thereof.

When will the funds be provided? Can HVCs get it sooner?

The HCAP will be implemented in a two-milestone payment grant scheme.

The first payment (which will represent 30% of an HVC’s approved HCAP amount) will be provided to an eligible HVC shortly after DELWP receives the HVC’s signature to the funding agreement (recall that funding agreements will not be issued before 21 February 2019).

The second payment (which will represent the remaining 70% of your approved HCAP amount) will be provided to the HVC shortly after DELWP receives confirmation that the HVC’s chosen solution has been successfully implemented and received evidence of the actual cost to implement the solution. The amount of the final grant instalment will be based on an HVC’s actual costs incurred and may also be reduced if the HVC fails to complete its works to the DB’s schedule of works to make its zone substations capable of meeting the legislated enhanced fault detection and suppression standards.

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Initial HCAP instalment payments will not be issued until DELWP’s PBSP team has received an HVC’s signed funding agreement.

At the application stage, I only have an estimated cost of REFCL works. Can this be used?

Yes. Submitting an application that provides estimated, rather than actual, costs of the HVC’s preferred solution is not only acceptable but is anticipated. If the cost estimate of the HVC’s preferred solution is a range of values, the HVC’s approved funding level initially will be based on the high end of the range amount. The final instalment of HCAP funding may be adjusted downward if the actual cost is less than estimated. If the actual cost is more than the upper end of the HVC’s cost estimate, there may be an adjustment upward after all eligible HVCs have received their second instalment payments but there is no guarantee that additional assistance can be provided.

What happens if the REFCL-readiness works cost more than was estimated?

If the actual cost of REFCL-readiness works is more than the upper end of the HVC’s cost estimate, there may be an adjustment upward to the level of funding assistance provided to the HVC after all eligible HVCs have received their second instalment of HCAP payments. However, DELWP’s PBSP team cannot guarantee that the HVC will receive any funding assistance for additional costs above its approved HCAP amount.

What if I have not received an HCAP application pack?

If an HVC has not received a HCAP application pack by late-August 2018 and it believes it is eligible for financial assistance under the HCAP scheme, please contact DELWP’s PBSP team at hcap@delwp.vic.gov.au. Alternatively, if an HV Customer believes it has all the information it needs, it can go directly to the online grant application at http://delwp1.force.com/publicform?id=a0h0B00001R4Jvm. If you save an application as draft, to easily access it later use the following link, https://delwp1.force.com.

Will there be disruptions to my business as part of REFCL-readiness works?

Possibly. As part of the works associated with the installation and testing of an HVC’s REFCL-readiness works, there may be some disruption to its electricity supply. The extent of this disruption will be dependent on the solution an HVC selects. HV Customers are encouraged to discuss these issues with their consultant and/or the person contracted to install the HVC’s preferred solution, as well as the relevant DB, sooner rather than later. An HVC may need to consider the cost of any mitigation solution such as back up generation during such disruptions as part of its options analysis.

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In addition, HVCs may experience some disruptions to their operations as the result of DBs installing and testing REFCLs and supply networks at zone substations that are legislated to meet the enhanced fault detection and suppression standards by the tranche two or tranche three deadlines. HVCs – or their consultants – should likewise discuss these works with their DB at their earliest convenience.

Will the broader local community be affected by installation of the REFCLs?

Yes. It is possible there will be outages on the DB’s supply network supplied from a legislated zone substation as the DB carries out testing of the REFCL systems to confirm that the distribution supply network from the substation is capable of operating in over-voltage conditions associated with REFCL operation. The distribution businesses will communicate with their HVCs in the usual way about these planned outages, consistent with both the law and their electricity supply contracts.

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