Victorians can expect slightly lower electricity costs after the energy regulator capped the amount of revenue that transmitter SP AusNet can recover from customers.
SP AusNet is the principal transmission network service provider in Victoria.
The Australian Energy Regulator (AER), which regulates the revenues of all transmission network providers in the national electricity market, has allowed SP AusNet to recover $1.6 billion from its customers over three years from April 1, 2014, to March 31, 2017.
"This decision will reduce electricity costs for Victorian consumers," AER chairman Andrew Reeves said.
"For the average four-person Victorian household, their residential bill should fall by $4 per year and halt the past trend of increasing transmission charges."
Mr Reeves said the bill for an average business should fall by $16 per year.
The cap of $1.6 billion would ensure that SP AusNet received sufficient revenue to cover its costs and provide a commercial return to investors.
"In addition, consumers will not pay more than required for efficient investment in, and efficient operation and use of, SP AusNet's transmission network."
The AER estimated that average transmission charges in Victoria would be reduced by about five per cent per annum over the three-year period.
Transmission charges account for about five per cent of a residential electricity bill in Victoria.
Transmission charges have a more significant impact on large energy users.
The AER said its decision provides SP AusNet about the same maximum revenue allowance that SP AusNet had initially proposed.