The Australian Energy Regulator (AER) has granted a class waiver under the Electricity Distribution Ring-fencing Guideline (Guideline) to distribution network service providers (DNSPs).
The class waiver allows DNSPs to contract with the Australian Energy Market Operator (AEMO) to provide Reliability and Emergency Reserve Trader (RERT) services via voltage management. The waiver is effective from 14 December 2022 to 15 April 2025 (inclusive), a period of 28 months, in light of stakeholder feedback regarding the potential long-term impacts of a class waiver.
The class waiver follows a request from AEMO to increase reserves to address forecast reliability gaps.
The AER considers the class waiver is necessary to meet AEMO’s need to procure RERT and provides benefits to consumers through likely lower RERT costs.
Our decision is set out in our decision document.
Background
AER is the regulator for electricity and gas networks in every state and territory in Australia except Western Australia.
Ring-fencing refers to the separation of distribution services provided by a DNSP from the provision of unregulated or contestable services by a DNSP, or an affiliated entity. Ring-fencing operates to separate regulated activities from competitive business activities to support competitive markets. The electricity distribution ring-fencing guideline prevents DNSPs discriminating in contestable markets in favour of themselves or affiliated entities.
RERT is a function conferred on AEMO to maintain power system reliability and system security. AEMO maintains a panel of RERT providers which allows AEMO to run an expedited tender process as technical details are pre-agreed. It is important that AEMO has access to various RERT panel members as required, to safeguard the security of the energy market during ‘Lack of Reserve’ events.