AusNet
AusNet Services is a diversified Australian energy infrastructure company that owns and operates regulated electricity transmission and distribution networks, as well as gas distribution networks, primarily in the state of Victoria.[1][2] The company manages Victoria's electricity transmission network, which spans 6,600 kilometers of high-voltage lines and supplies power to approximately 6.6 million residents across the state, while its distribution networks serve over 1.5 million customers in eastern electricity and western gas regions.[3][4] AusNet emphasizes delivering safe, reliable, and affordable energy, with recent strategies focusing on integrating renewable energy sources and supporting decarbonization goals amid Australia's transition to sustainable power systems.[5][6] AusNet was delisted from the Australian Securities Exchange in February 2022 following its acquisition by a consortium led by Brookfield Asset Management, including Australian and Canadian pension funds, marking a shift to private ownership that has enabled focused investments in network modernization and expansion.[7][8] The company's operations are subject to regulation by bodies such as the Australian Energy Regulator, ensuring compliance with standards for service reliability and pricing, though it has navigated challenges related to network maintenance and integration of distributed energy resources like solar.[9][10]
History
Formation and early development
AusNet Services traces its origins to the privatization of Victoria's state-owned energy assets in the mid-1990s, following the restructuring of the State Electricity Commission of Victoria (SECV). The SECV, established in 1919 to manage electricity generation, transmission, and distribution, was dismantled under the liberal Kennett government as part of broader economic reforms aimed at reducing public debt and introducing competition. In 1995, the transmission functions were separated into PowerNet Victoria, which operated the state's high-voltage electricity grid spanning approximately 6,800 circuit kilometers. This entity was privatized and sold to U.S.-based GPU Inc. in October 1997 for A$2.7 billion, marking one of the first major sales in Victoria's electricity sector disaggregation.[11][12] GPU's ownership of PowerNet was short-lived amid post-acquisition financial pressures. In June 2000, Singapore Power International (SPI), a subsidiary of Singapore Power Ltd., acquired PowerNet Victoria for A$2.1 billion, integrating it into its growing portfolio of Australian infrastructure. This purchase followed SPI's competitive bid and aligned with Singapore Power's strategy to expand internationally. Concurrently, SPI acquired TXU Australia's network assets in April 2004 for A$5.1 billion, which included electricity distribution operations in eastern and northern Victoria (formerly Eastern Energy, rebranded as TXU Networks) serving over 600,000 customers across 122,000 square kilometers. The gas distribution network, originally formed as Westar in 1997 from the Victorian gas industry's vertical separation, was also consolidated under SPI after subsequent transactions, providing service to western Victoria.[13][14][15] These assets were restructured into a unified entity, SP AusNet, which Singapore Power floated on the Australian Securities Exchange (ASX) and Singapore Exchange (SGX) on December 14, 2005, raising approximately A$1 billion by selling 49% of shares while retaining majority control. At inception, SP AusNet managed Victoria's sole electricity transmission network, an electricity distribution franchise in the state's east and north, and a gas distribution system in the west, with total assets valued at around A$6 billion and serving 1.2 million connection points. Early operations focused on regulatory compliance under the National Electricity Rules, network maintenance, and capital investments to support growing demand, achieving initial annual revenues of A$800 million by 2006. The company's stapled security structure combined its transmission and distribution subsidiaries to streamline operations and financing.[16][17]Key acquisitions and restructurings
In 2007, SP AusNet (the predecessor to AusNet Services) acquired gas infrastructure assets from Origin Energy Limited, including pipelines serving eastern and southern Australia, which expanded its gas distribution operations in Victoria and strengthened its integrated energy network portfolio.[18] On 18 June 2015, AusNet Services executed a comprehensive corporate restructure via court-approved schemes of arrangement to consolidate its triple-stapled security structure—comprising shares in AusNet Services Limited, units in AusNet Services Finance Trust, and shares in SP AusNet Transmission Limited—into a single listed entity under AusNet Services Limited as the head company.[19][20] This involved securityholders rolling over their holdings into ordinary shares in the parent entity, with subsidiary assets and trusts effectively amalgamated, thereby eliminating stapling arrangements, reducing administrative overheads, and simplifying tax and regulatory compliance.[21] The Australian Taxation Office confirmed rollover relief under Division 615 of the Income Tax Assessment Act 1997 in Class Ruling CR 2015/45, preserving cost bases for participants.[20] In June 2016, AusNet Services purchased the Mortlake Terminal Station, a key 500 kV substation connected to its transmission network, from Origin Energy for an undisclosed amount, bolstering electricity transmission capacity in western Victoria.[22] These moves reflected AusNet's strategy to optimize asset integration and operational efficiency amid Australia's privatized energy sector.Ownership changes and delisting
In November 2021, AusNet Services entered a scheme implementation deed with a consortium led by Brookfield Infrastructure, comprising Australian and Canadian pension funds including Sunsuper Superannuation Fund, Alberta Investment Management Corporation, Ontario Municipal Employees Retirement System, and Ontario Teachers' Pension Plan. The group offered A$2.65 per share in cash for 100% of AusNet's shares, implying an equity value of A$10.2 billion and a 34% premium to the undisturbed closing price of A$1.98 on 29 October 2021.[23][24] The scheme received approval from more than 99% of disinterested shareholders in December 2021, along with regulatory clearances from the Australian Competition and Consumer Commission and the Foreign Investment Review Board. Completion occurred on 15 February 2022, with Australian Energy Holdings No. 4 Pty Limited—a vehicle controlled by the consortium—acquiring all outstanding shares from existing holders, including State Grid Corporation of China, which retained a roughly 20% strategic stake until the transaction despite prior government scrutiny over foreign ownership in critical infrastructure.[25][26][27] AusNet Services Limited was delisted from the Australian Securities Exchange at the close of trading on 16 February 2022, ending its status as Australia's last publicly listed electricity transmission and distribution utility. The buyout added approximately A$2 billion in new debt to AusNet's balance sheet to fund the transaction, shifting leverage metrics while maintaining investment-grade ratings from agencies like S&P Global (BBB) and Moody's (Baa1).[28][29][30] Under private ownership, Brookfield holds a controlling 45% stake, with minority interests divided among the consortium's pension fund partners; prior major holders like Singapore Power International— which had divested portions of its original controlling interest over the prior decade—fully exited via the scheme. This privatization reflected broader trends in Australian infrastructure toward institutional consolidation for long-term capital investment amid stable regulated returns.[31][32][24]Corporate structure and ownership
Major stakeholders and governance
AusNet is wholly owned by a consortium led by Brookfield Infrastructure Partners, following the completion of a A$10.2 billion acquisition in February 2022 that resulted in the delisting of AusNet Services Limited from the Australian Securities Exchange on 16 February 2022.[28][23] The acquiring entity, Australian Energy Holdings No 4 Pty Ltd, is controlled by Brookfield, with co-investors including Alberta Investment Management Corporation, Investment Management Corporation of Ontario, and Healthcare of Ontario Pension Plan.[33][25] Brookfield maintains a controlling interest, influencing strategic decisions through its board representation.[34] As a privately held company, AusNet's governance is overseen by a board of directors comprising representatives from its major owners, including Steven Neave, Mark Ellul, and Chad Hymas, who ensure alignment with investor objectives and regulatory requirements.[35] The board approves financial reports and strategic initiatives, as evidenced by its endorsement of the 2024 full-year results on 28 March 2025.[36] Chief Executive Officer David Smales, appointed on 15 November 2023, leads day-to-day operations with over 40 years of energy sector experience.[37] Key executives supporting governance include Charlie Boyes as Chief Financial Officer, responsible for financial reporting and capital management; Fran Duiker as Executive General Manager for Gas & Metering; Andrew Linnie for Distribution; and Elizabeth Ryan for Transmission, among others focused on operations, compliance, and risk.[37] AusNet adheres to best-practice corporate governance principles, prioritizing accountability, transparency, and risk management, with annual disclosures such as its Modern Slavery Statement.[38] This structure reflects the post-acquisition shift to private ownership, reducing public disclosure obligations while maintaining oversight by institutional investors.[39]Regulatory framework and compliance
AusNet Services operates as a regulated monopoly in Victoria's electricity transmission and distribution networks, as well as gas distribution, primarily under the oversight of the Australian Energy Regulator (AER). The AER enforces economic regulation through the National Electricity Rules (NER) for electricity activities and the National Gas Rules (NGR) for gas, conducting five-year revenue determinations to cap allowable revenues, promote efficiency, and protect consumers from excessive pricing. For electricity distribution, the AER approved AusNet's revenue cap for the 2021–2026 period on 30 April 2021, following submission of proposals in 2020, allowing recovery of approved costs plus a regulated return on investment.[40] Transmission revenues are similarly reset every five years; the AER's determination for AusNet's network spanned 1 April 2022 to 31 March 2027, incorporating cost assessments and efficiency benchmarks. Gas distribution proposals must also be submitted to the AER every five years, outlining services, expenditures, and pricing for approval.[41] Additional regulatory requirements include ring-fencing obligations under AER guidelines, which mandate separation of regulated monopoly functions from competitive or non-regulated activities to prevent cross-subsidization and foster market competition. AusNet publishes compliance registers, such as for regulated stand-alone power systems, as required by clause 6.2.3 of the AER's Electricity Distribution Ring-fencing Guideline, updated quarterly as of March 2023.[42] Major capital projects undergo the AER-overseen Regulatory Investment Test (RIT), a cost-benefit analysis ensuring options deliver net benefits to consumers.[43] The Essential Services Commission (ESC) supplements AER oversight by enforcing customer service and reliability standards under Victorian legislation. AusNet demonstrates ongoing NER compliance through annual checklists and proposals, such as those submitted for transmission revenue resets.[44] However, lapses have occurred: in April 2024, the ESC accepted a $12 million court-enforceable undertaking from AusNet for inadequate outage information provision during February 2023 storms, stemming from a website failure that hindered customer access to updates.[45] In April 2025, the AER suspended AusNet's Consumer Service Incentive Scheme (CSIS) obligations for 2024–2025 and 2025–2026, citing extraordinary weather events impacting performance metrics.[46] Safety compliance issues include a September 2025 guilty plea by AusNet Transmission Group to Energy Safe Victoria charges for delaying upgrades on 48 hazardous transmission towers, resulting in fines.[47] These incidents reflect targeted enforcement rather than systemic failures, with AusNet maintaining internal policies on ethical conduct and anti-corruption to mitigate risks.[48]Operations and infrastructure
Electricity transmission network
AusNet owns and operates Victoria's sole electricity transmission network, responsible for transporting bulk power from generators to distribution networks and large industrial customers across the state.[3] The network consists of approximately 6,600 kilometres of overhead transmission lines, primarily supported by steel lattice towers, traversing both public and private land and covering easements totaling around 17,500 hectares.[3][49] These lines operate at high voltages ranging from 132 kV to 500 kV, enabling efficient long-distance power flow from sources including coal-fired plants, gas turbines, and renewable facilities such as wind and solar farms.[50][51] Key infrastructure includes about 50 terminal stations for interfacing with the national grid and multiple substations for voltage transformation and switching, ensuring connectivity within the National Electricity Market (NEM).[52][50] Network planning and augmentation are directed by the Australian Energy Market Operator (AEMO), while AusNet handles construction, operation, and maintenance under oversight from the Australian Energy Regulator (AER).[53] Recent enhancements focus on integrating variable renewable generation, with projects like the Western Renewables Link aimed at expanding capacity to support Victoria's transition from fossil fuels.[51] Maintenance protocols emphasize bushfire risk mitigation, including vegetation management and line inspections, given the network's exposure in rural areas, though no transmission-ignited bushfires have been recorded in Victoria.[54][55]Electricity and gas distribution networks
AusNet operates an electricity distribution network serving approximately 802,000 customers across 80,000 square kilometres in eastern and north-eastern Victoria, including parts of north and east Melbourne, with 93% of the area classified as regional or rural.[2] The network comprises 39,000 kilometres of overhead powerlines, 15,660 kilometres of underground cables, 418,400 power poles, and 90,000 streetlights, delivering power at lower voltages from transmission substations to end-users.[2] This infrastructure supports residential, commercial, and industrial demand, with a focus on maintaining reliability in sparsely populated rural zones where single-wire earth return (SWER) lines predominate for over 540 feeders as of October 2024.[56] The electricity distribution assets are regulated by the Australian Energy Regulator (AER) under the National Electricity Rules, with AusNet responsible for augmentation, maintenance, and connection services to ensure supply security.[9] Network planning accounts for growing distributed energy resources, such as rooftop solar, which influence feeder loading and voltage management, with 29% of distribution feeders serving fewer than ten customers per kilometre of line.[56] AusNet's gas distribution network spans 60,000 square kilometres across western Melbourne, Geelong, and western Victoria, connecting 824,000 residential, industrial, and commercial customers via 12,587 kilometres of pipelines.[2] The system, evolved over more than a century, includes mains and services pipes designed for natural gas delivery at regulated pressures, with ongoing renewals targeting ageing infrastructure to enhance safety and reliability. Investments, such as a $40 million program in 2025, focus on replacing segments in high-risk areas to mitigate leaks and support decarbonization transitions.[57] The AER oversees pricing and access arrangements, ensuring the network's economic viability while prioritizing consumer protection.[58]Ancillary services and innovations
AusNet delivers ancillary services primarily through its battery energy storage systems (BESS), which support grid stability in the National Electricity Market (NEM). The company's grid-scale BESS assets, including those serving community-scale applications for 200 to over 1,000 customers, function as scheduled or unscheduled generators to provide Frequency Control Ancillary Services (FCAS), utilizing advanced software for market participation and reactive power management without active power involvement.[59][60] The Ballarat BESS, Victoria's inaugural utility-scale grid-connected battery developed in a consortium involving AusNet, Fluence, and EnergyAustralia, is registered across all eight FCAS markets to deliver contingency and regulation services, enhancing system security and influencing regulatory responses to storage integration.[61][62][63] AusNet owns the asset and leases capacity to NEM participants for energy arbitrage and ancillary provision, with the system commissioned in 2021 and supported by Australian Renewable Energy Agency (ARENA) funding.[64][65] In gas distribution, AusNet offers ancillary reference tariffs for non-core services such as metering, connections, and equipment maintenance, effective from July 1, 2024, under Australian Energy Regulator (AER) oversight, with charges structured to recover costs for residential and commercial users.[66][67] These include fixed non-reference charges for items like service pipe installations and pressure testing, billed ex-GST and aligned with the Gas Access Arrangement.[68] AusNet pursues innovations to facilitate renewable integration and network optimization, including an innovation fund established for the 2021-26 regulatory period to finance projects yielding long-term customer benefits, such as enhanced DER hosting capacity.[69] Project EDGE, conducted from 2020 to 2023 with ARENA funding and AEMO collaboration, demonstrated aggregation of distributed energy resources (DER) like rooftop solar and batteries into NEM dispatchable units, enabling zero-emission energy dispatch.[70] In 2024, AusNet implemented Low-Voltage Distribution Energy Resource Management Systems (DERMS) for real-time internet-based control of DER, addressing growth in photovoltaic installations—now on one-third of customer roofs and projected to double within 20 years—and supporting the Victorian Solar Emergency Backstop launched October 1, 2024, to manage excess solar exports during low demand.[70] The company is advancing toward Distribution System Operator (DSO) capabilities, incorporating flexible export limits and dynamic operating envelopes by 2025 to maximize network utilization amid decentralization.[70] Additional innovations include a 2020 partnership with ev.energy for intelligent EV charging management, optimizing network load and reducing costs via algorithm-driven scheduling, and development of third-party data interfaces under the innovation program to enable seamless access to AusNet's energy datasets for external applications.[71][72] In 2025, AusNet achieved an Australian first by live-diverting a 500 kV transmission circuit into a terminal station while energized, minimizing outages during upgrades.[73]Performance and economic impact
Financial metrics and revenue sources
AusNet's primary revenue sources consist of regulated charges for electricity and gas distribution services, electricity transmission operations, and ancillary activities such as customer connections and network development projects. These regulated revenues, which comprised approximately 87% of total revenues for the year ended 31 December 2024 (up from 82% in 2023), are determined through periodic reviews by the Australian Energy Regulator (AER) for distribution networks and the Australian Energy Market Operator (AEMO) for transmission, based on allowed costs, returns on regulated asset bases, and efficiency benchmarks.[36] Unregulated revenues, including developer contributions and finance lease income, account for the remainder and are subject to market conditions, with notable variability in segments like development and future networks due to project timing.[36] For the year ended 31 December 2024, total revenue reached A$2,290.5 million, a 4.1% increase from A$2,201.1 million in 2023, driven primarily by inflation-linked adjustments in regulated price paths and higher transmission revenues from AEMO settlements.[36] Key financial metrics included EBITDA of A$1,274.6 million (down 0.4% year-over-year) and net profit after tax of A$143.6 million (down 82.5% due to one-off prior-year gains).[36] Revenue growth in electricity distribution and transmission reflected approved AER determinations and increased network utilization, while gas distribution benefited from similar regulatory allowances offset by substitution policy impacts.[36]| Segment | Revenue (A$M, 2024) | % of Total | Change from 2023 |
|---|---|---|---|
| Electricity Distribution | 1,121.5 | 49% | +4.9% |
| Electricity Transmission | 691.4 | 30% | +8.0% |
| Gas Distribution | 260.8 | 11% | +6.6% |
| Development & Future Networks | 231.3 | 10% | -10.9% |
Reliability and outage statistics
AusNet measures electricity distribution reliability using standard metrics defined by the Australian Energy Regulator (AER), including the System Average Interruption Duration Index (SAIDI, in minutes per customer), System Average Interruption Frequency Index (SAIFI, interruptions per customer), and Momentary Average Interruption Frequency Index (MAIFI). These exclude major event days (MEDs) under the Service Target Performance Incentive Scheme (STPIS), which incentivizes performance against historical benchmarks. For FY2023/24, AusNet reported favorable unplanned SAIDI, SAIFI, and MAIFI outcomes for rural feeders after exclusions, attributed to reliability-centered maintenance and milder weather, though urban feeders faced impacts from three MEDs totaling approximately 673 unplanned SAIDI minutes.[56][74]| Feeder Class | Metric | 5-Year Target | FY2022/23 Actual | FY2023/24 Forecast | FY2024/25 Target |
|---|---|---|---|---|---|
| Urban | Unplanned SAIDI (min/customer) | 392.035 | 84.097 | 75.525 | 110.388 |
| Rural Short | Unplanned SAIDI (min/customer) | 1,091.926 | 244.405 | 195.819 | 169.571 |
| Rural Long | Unplanned SAIDI (min/customer) | 1,605.178 | 413.267 | 351.194 | 281.800 |
| Urban | Unplanned SAIFI (interruptions/customer) | 1.438 | 0.669 | 0.621 | 0.984 |
| Rural Short | Unplanned SAIFI (interruptions/customer) | 2.189 | 1.554 | 1.380 | 1.245 |
| Rural Long | Unplanned SAIFI (interruptions/customer) | 3.917 | 2.629 | 2.307 | 2.020 |
| Urban | Unplanned MAIFI | 3.452 | 3.089 | 3.060 | 2.949 |
| Rural Short | Unplanned MAIFI | 4.799 | 4.997 | 4.833 | 4.220 |
| Rural Long | Unplanned MAIFI | 7.610 | 9.799 | 9.581 | 6.534 |