Power company SP AusNet can apply to pass to customers any shortfall in its insurance cover for the Black Saturday bushfires, the Australian Energy Regulator (AER) has decided.

Plaintiffs in two class actions led by law firm Maurice Blackburn claim faults in SP AusNet’s electricity network caused the Murrindindi-Marysville and Kilmore East-Kinglake fires on February 7 2009.

They are seeking damages from the energy group, which is defending the claims.

The Kilmore East-Kinglake trial has begun and is expected to continue for the rest of the year. The Murrindindi-Marysville case is yet to come to trial.

The two fires killed 159 people and destroyed 1780 homes.

The AER ruling, which follows a draft decision last year, allows SP AusNet to apply to recover from customers costs over and above its insurance cover, the regulator’s Chairman Andrew Reeves says.

“Our assessment of any… application would consider, among other things, the actions taken by SP AusNet to manage its risks and to reduce the magnitude of the costs,” he said. “We would also consider any court judgements or litigation settlements.”

Maurice Blackburn spokesman Cam Scott says the energy company has “significant insurance coverage, huge assets, the ability to raise capital and has generated about $700 million in profits since the Black Saturday bushfires. So we strongly believe it should explore other mechanisms before even considering a price hike.

“If SP AusNet is ultimately deemed responsible for these devastating bushfires, there is no doubt it should compensate the victims for their suffering.

“We don’t believe targeting customers with higher prices – including some of the victims of the fires – is a mechanism it needs to, or should pursue.”

Susan Taylor, SP AusNet’s General Counsel and Company Secretary, said: “In circumstances where unforeseeable events or events of an unforeseeable magnitude occur, it may be more efficient and more cost-effective for the public if a distribution network service provider applies to the AER to have costs that exceed its insurance cover, if any, recovered as regulated revenue only after such an event has occurred, rather than upfront through an insurance premium.”