Communities from Tyrendarra to Portland have been calling for three phase power to be delivered to the region for more than six years.

But the fight was dealt a blow following the Australian Energy Regulator's latest decision not to support Powercor's proposed upgrade of the current single phase power infrastructure in Tyrendarra, Strathdownie, Cape Bridgewater and Gorae West.

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Over 70 businesses and residents have written to the regulator urging it to reverse its recommendation against Powercor's draft proposal.

Narrawong District Primary School Principal Kate Anderson said a lot of her student's families lived in the Tyrendarra area and would benefit greatly from upgrading the single phase power to three phase.

"As a school we would absolutely benefit from this investment enabling us to install air conditioners in our buildings, which we have been previously unable to do," she said.

"With improved technology in our school, the updating of our systems and charging of our devices is also a consideration in this.

"We teach our students about renewable energy, and unfortunately we do not have the infrastructure to support this. Improved business in the area will continue to make our school viable due to the creation of more jobs and the flow on effects of families coming to our beautiful part of Victoria."

Food and Fibre Great South Coast chair Georgina Gubbins said as Victoria's largest food and fibre producer, the south-west deserved modern infrastructure.

"Whether you work in banking, agriculture, forestry, food processing, education, recreation, tourism or local government - our entire community understands that we operate on a shared value model," she said.

"To enhance our position as a renewable energy leader, maintain our status as Victoria's largest food and fibre producer, and position ourselves as the leading region to live and work - we need infrastructure that unlocks job creation, innovation and investment.

"Nothing could have made the shared value case better than this outpouring of support from individual residents, business leaders, councils, and community representatives.

"When you consider we had about a month to review Powercor's 155-page revised proposal over the Christmas and New Year period, it's clear that the level of regional support is phenomenal."

Powercor proposed to spend $8.7 million to upgrade more than 85 kilometres of single-phase electricity network (SWER) to three phase power.

The upgrade would improve supply for 1130 customers and increase the network's capacity to support growth.

Ms Gubbins said it would bring in $2 million of annual value in the form of jobs, economic value and flow-on spending.

Food and Fibre GSC executive officer Natalie Collard said the regulator's current processes left regional communities behind.

"We believe the AER needs a decision-making process that is more robust and strategic and considers the wider economic benefits that infrastructure investments generate in regional Australia," she said.

"In particular AER should consider the inability of infrastructure to be effectively built if the user pays principle is the sole evaluation criteria, particularly in rural areas where population density is less than metropolitan areas.

"The implementation of this regional proposal becomes increasingly urgent when the whole of Victoria is recovering after the pandemic COVID-19, responding to social infrastructures demands and preparing for the 'future-proofing' plan."

Infrastructure Victoria has included the energy upgrade in its Draft 30-Year Infrastructure Strategy Priorities for the region, released in December 2020.

"We call on the AER to value regional infrastructure appropriately and not diminish the value of regional infrastructure to the regional community and state economy. It is entirely appropriate for the AER to review its evaluation process to ensure it is working on behalf of what is best for all Australians."

The AER told The Standard in a statement the state government should contribute to the cost of the upgrade.

"The AER's Consumer Challenge Panel reviewed Powercor's initial proposal for the SWER project and did not support the measure as it was presented on the grounds that all Powercor consumers would be required to pay for a line that only a small percentage would access.

"Additionally, the panel suggested that other beneficiaries of an upgraded line, such as state government and the distributor, should contribute to the cost of the work."

It will make a final decision by April 30.

A Powercor spokesman said the company was disappointed with the regulator's stance.

"We believe our almost $9 million proposal would have provided broad social and economic benefits to these regions," he told The Standard.

"While we are disappointed with this decision, the AER's draft determination is clear that our proposal will not receive support in the final decision.

"Therefore, we have not proceeded with this plan in our revised proposal but we have offered to the community that we will support their objectives if they seek other avenues to progress these upgrades."

Tyrendarra dairy farmer Bruce Knowles has been fighting to upgrade the "limiting" and "archaic" power infrastucture in the region for years.

"The lack of reliable efficient power is a frustration we talk about most days. Whilst I appreciate that unless one lives side by side with other businesses and residences all sharing a single wire beyond its limit, one cannot really appreciate or understand the reality that we are working in, in this 'first world country'," he said.

"Therefore, one does not understand the frustration at the lack of vision, concern and understanding of the curbing of the economic potential in our region when the government keeps knocking you back when asking to upgrade from this archaic infrastructure.

"To now hear that you (the AER) do not think this relatively small investment by Powercor of less than $9 million to help deliver three phase power would be justified... is an insult; it demonstrates a lack of understanding of the economic capacity and potential of the region and it financial blow to these communities which has responded with credible advocacy efforts done in this regard over many years.

"Every regional customer should have access to three phase power in the same way as our city cousins have."

South West Coast MP Roma Britnell said the upgrade was imperative for supporting renewable energy development in the future.

"What's getting missed is to have the ability for us to have a successful renewable energy future; you have to have the ability to feed the energy we create on farms back into the grid," she said.

"If we don't have adequate infrastructure how will we be able to manage better in the future?

"It's very disappointing the regulator has not understood the benefit and using the economic argument they have demonstrated they didn't get it. I hope the government can see this as an opportunity to step in."

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