United Energy



United Energy's electricity distribution network covers 1,472 km2 of south-east Melbourne and the Mornington Peninsula

The distribution network transports electricity from the high voltage transmission network to residential, commercial and industrial electricity users.

United Energy's distribution area is largely urban and, although geographically small (about 1% of Victoria's land), serves around 25% of Victoria's population.

Ownership interest 66%
Revenue ($ million) 510
EBITDA ($ million) 360
Regulatory reset date 1 January 2016

Revenue streams

United Energy’s distribution business generates predictable, regulated revenues. Approximately 92% of United Energy’s total revenue comes from network tariffs and metering charges, for the use of United Energy’s distribution network and for the use of the transmission grid. The tariffs are levied on electricity retailers, who pass these costs on to their customers. Growth in network tariff revenue is driven by volume growth and regulated network tariff charges.

Other revenue comes from services which United Energy provides to its customers, such as relocating assets at the request of our customers, extending existing distribution networks, providing public lighting to local council areas, and access charges for the use of electricity distribution poles to telecommunication companies.

The regulatory price determinations, which regulate the majority of these revenues, are undertaken by the Australian Energy Regulator (AER) every five years.

Mature Network, Stable Customer base

United Energy’s distribution area is largely urban. While it covers only about 1% of Victoria’s land area, it is home to around 25% of the state’s population. Approximately 90% of United Energy’s end customers are residential.

The distribution of electricity is an essential service and United Energy exists within a heavily regulated environment, operating as a natural monopoly within its distribution area.

In recent years the industry has witnessed growing levels of discussion and debate in the community around energy issues caused by a variety of interrelated customer, technology, political and regulatory changes in the external environment.

While the grid will always be the backbone of the energy system, the way customers are using it is changing with solar PV and associated battery storage becoming more prevalent. However, due to the high socio-economic demographic of UE’s customer base and the Victorian climate, solar PV penetration has been much lower across United Energy’s network.

While overall consumption has been flat to slightly declining in recent years, peak demand has continued to grow.

Along with introducing customer-led demand management initiatives, United Energy is at the forefront of tariff reform where it is working with industry, customers, government and regulators to achieve better alignment between individual customer use profiles and their resultant cost on the network.

Fundamental to the tariff reform initiatives is a departure from traditional energy consumption only tariffs which do not accurately signal the cost of network capacity required to meet short periods of maximum network demand.

Through a more cost reflective pricing structure it is envisaged that
demand tariffs will result in:

  • reduced cross subsidies between different types of residential users. For example, air conditioning, solar PV and seasonal consumption;
  • reduced rate of network investment as customers respond to price signals by shifting discretionary load to off-peak periods, subsequently reducing load in peak demand periods;
  • better alignment of investment signals around introduction and adoption of new technology such as solar PV and battery storage; and
  • benefit realisation of the AMI program where greater insight about customer consumption profiles will lead to overall reduction in cost to network users.


United Energy’s current regulatory period covers 2011–2015. United Energy submitted its 2016-20 Regulatory Proposal in April 2015. Where the previous regulatory period was about transforming United Energy, the next will be about building a more customer-centric business. United Energy’s investment proposal is designed to maintain current levels of reliability.

United Energy has proposed a $1.2 billion investment on the network, up from $1.0 billion in the 2011-15 period. This is driven by an increase in the volume of asset replacement and investment to reduce the risk of bushfires from electricity distribution infrastructure.

Other proposed increases include $5 million for information technology to provide customers with better communication about network performance, improve customer service and engagement, and empower customers through better access to their energy consumption data.

Investment to meet peak demand will be cut by $30 million, through the pursuit of alternative technology solutions including demand management initiatives and battery storage.

Advanced Meter Infrastructure (AMI) program

United Energy achieved practical completion of its best endeavours rollout obligation for its AMI project by 30 June 2014.
In addition to customer benefits, AMI is providing benefits to the network operator, including:

  • hazardous ‘Loss of Neutral’ faults can now be detected remotely;
  • neutral integrity testing can be undertaken largely remotely, avoiding site visits and manual testing at around 65,000 premises per annum. This results in annual savings of approximately $2.6 million;
  • enhanced monitoring of supply to life support customers can be undertaken during storm events;
  • remote fault identification to avoid wasted truck visits and faster supply restoration;
  • improved voltage data provides the network operator with a better understanding of equipment failure risks and assessment of damage claims;
  • improved data on transformer peak load and the likely requirement for transformer upgrades facilitates more efficient use of existing capacity and more efficient investment;
  • calculation of dynamic cyclic ratings for distribution transformers enables us to achieve greater use of the spare capacity in the network;
  • rebalancing of over loaded phases enables us to improve network utilisation on peak demand days, and reduce the need for network augmentation; and
  • enhanced load switching enables us to better manage expected peak demand days in high risk areas of the network.

Network Strategy and Innovation

In the next regulatory period, United Energy will focus on the specific challenges presented by ageing infrastructure. The age of United Energy’s infrastructure is naturally linked to the historic development of the part of Melbourne in which it operates. The significant growth in the network during the 1950s and 1960s, as south-east Melbourne expanded, is now driving increases in investment, as assets approach their end of life.

Ageing assets contribute significantly to the risk of equipment failure and decreased reliability of network services. Expenditure plans for the forthcoming period will address the impacts of an ageing asset base  on the reliability performance of the network.

Operational overview

Year to 30 June 2015 Year to 30 June 2014
Network connections
Small (residential & unmetered) 604,395 600,243
Medium size business 56,083 56,150
Commercial & industrial 3,288 3,303
Total 663,766 659,696
Electricity load - GWh
Small tariff 2,590 2,829
Medium tariff 1,401 1,378
Large tariff 3,470 3,545
Total electricity load 7,461 7,752
Distribution network statistics
SAIFI (number of interruptions) 0.9 1.1
MAIFI (number of interruptions) 1.0 1.1
Unplanned SAIDI (minutes) 71 79
Occupational health and safety
Lost time injuries 0 1
Scope 1 CO2-e emissions   5,913 t

Financial summary

$ million
Year to 30 June 2015 Year to 30 June 2014
Distribution revenue 381 358
Total revenue 510 480
EBITDA 360 334

Credit ratings

Rating levels as at 10 September 2015:

S&P BBB (stable outlook)
Moody's Baa2 (stable outlook)