Victoria’s power network operator has warned billions of dollars of upgrades are needed to keep the lights on. It will cost everyone
In a perfect storm for bill-payers, Victoria is facing a major power network upgrade at the same time as $19bn in new projects begin.
Victorians face a perfect storm of power cost hikes, with ageing terminals needing replacement at the same time as construction begins on $19 billion of new high voltage power lines.
Electricity giant Ausnet has revealed that it will need to spend $2.4bn on upgrading the state’s network between 2027 and 2032, in order to reduce the risk of blackouts.
This will add an average of $52 a year to household energy bills and $129 to small businesses.
But the company’s pricing proposal, recently sent to regulators, signals more pain looms across the transmission sector, because its share of the revenue pie is set to fall from 47 per cent to 26 per cent over a decade.
Extra capital spending outside of Ausnet’s remit includes $7.9bn for new VicGrid projects and $11.1bn in federal upgrades, which will build high voltage lines and other transmission systems needed to plug in renewable energy and ease pressure on wholesale prices.
Experts warn a painful transition period is looming, because billions of dollars of upgrades will need to be paid for before generation benefits flow through.
Ausnet’s pricing proposal to regulators also says Victoria has largely avoided major and costly upgrades in recent decades, but that this is due to end.
“Victoria’s transmission network is at a turning point,” it says.
“After decades of low and stable costs, we now face a period of significant uplift – driven by ageing assets, new operational challenges, and broader system transformation.
“Victoria is distinct from the other transmission networks in Australia, who have all seen significant waves of augmentation expenditure in the past.
“Other networks have already undertaken much of the investment that Victoria now faces.”
National energy policy director at St Vincent de Paul Society, Gavin Dufty, said there was a “wall of capital expenditure coming” that was “not just the big stuff”.
“There will be an initial increase in bills; theoretically there would be a reduction in the future, once there is new generation bolted on,” he said.
Mr Dufty said it was important to avoid duplication when upgrading transmission, which is high voltage lines and terminals, and distribution, which is the power lines to deliver power to homes and businesses.
He said tariff reform was needed so people have incentives to avoid overloading the grid at peak times, which “gives you more time to build the other stuff that’s needed”.
“We need tariff reform so that there are incentives to use more energy in the middle of the day, rather than pay for distribution upgrades,” he said.
Ausnet owns and operates the transmission network and one of the state’s five distribution networks, and insists in its pricing proposal it has been “laser-focused” on efficient spending.
“We propose modest uplifts in a limited number of areas and have avoided gold-plating,” it says.
A third of its capital spending would be on seven major projects to upgrade Moorabool, Sydenham, Keilor, South Morang, Rowville, and Loy Yang/Hazelwood terminal stations.
It also says the network is “now operating close to its limits and is significantly more complex to manage” due to more rooftop solar, closure of large baseload coal generators, and the need to create new pathways for large-scale renewables.
It warns careful planning is needed to avoid rare but extreme cases where protection systems trip and large sections of the grid – or the entire network – loses power.
“Although Australia has not experienced a statewide black system event since South Australia in 2016, these events do occur around the world as seen in recent occurrences in Spain and Portugal in April 2025,” it says.
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Originally published as Victoria’s power network operator has warned billions of dollars of upgrades are needed to keep the lights on. It will cost everyone
