EXCLUSIVE: Regional Victoria's electricity distributors boosted profits by cutting operations and maintenance budgets by $200 million in the seven years prior to Black Saturday.
A Weekly Times analysis of both distributors' financials, supplied to the Victorian Essential Services Commission and Australian Energy Regulator, shows Powercor underspent by $105 million and SP AusNet by $95.3 million on their operations and maintenance budgets in the seven years to December 31, 2008.
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Powerlines managed and maintained by both SP Ausnet and Powercor have been implicated in starting five of Black Saturday's fires.
The 2009 Victorian Bushfires Royal Commission has heard evidence outlining concerns about the poor maintenance of power lines.
The Weekly Times has discovered that power industry regulators' performance reports repeatedly state: "Powercor and SP AusNet continued their trend of spending substantially less than the forecast" on operating and maintenance.
Each company's tariffs are set by government regulators, based on the distributors' forecast capital, operations and maintenance spending over a five-year period.
However SP AusNet and Powercor have been able to boost their profitability by cutting operating and maintenance budgets they presented to the regulators at the start of the five-year price setting period.
The AER report states one of the key reasons for the distributors' higher profits was reduced spending on their operating and maintenance budgets.
An AER spokesman said underspending on operating and maintenance raised the electricity distributors rates of return, but all the regulator could do was audit their performance and factor their underspending into its pricing determinations for the next five years, 2011-15.
The AER report shows country Victoria's worst performing supply areas for power outages in 2008 were SP Ausnet's Marysville, Upwey in Melbourne's outer east and Doreen in Melbourne's northern fringe substation areas.
Powercor's worst performing substation areas were Wemen in the Mallee and Charam in the West Wimmera.
The AER report also found: "The number of low reliability feeders within SP AusNet's network in 2008 remained high, increasing to above 30 per cent".
The report found the reliability of Powercor's feeders had improved. An SP Ausnet spokesman said the company's merger with TXU in 2004 had resulted in significant savings on its forecast operations and maintenance spending.
"SP AusNet's maintenance expenditure has increased in each of the past three years," the spokesman said.
A Powercor spokesman said the under-spend was a result of increased efficiencies, with 70 per cent of savings passed on to customers.
