The Australian Energy Regulator (AER) has published a Ring-fencing Guideline that is designed to encourage the development of innovative services that will give consumers better energy choices.
The Guideline, effective from today but to be fully implemented by network distribution businesses by 1 January 2018, aims to prevent businesses from shifting costs into their regulated business or taking unfair advantage of their regulated position in the energy market.
The AER’s Guideline requires distribution network service providers (DNSPs) to separate their regulated business activities, costs and revenues from other unregulated services, such as solar PV and battery installations. Unregulated services would need to be provided through a separate entity that provides services in a competitive market.
“This binding Guideline fosters a competitive market, and will drive better consumer choices allowing customers to find the energy offer that best suits their needs,” AER Chair Paula Conboy said.
New technologies such as PV solar installations, smart(er) appliances, battery storage, and electric vehicles are being offered to consumers. The services these technologies provide will enable households and businesses to better manage how much electricity they use and ultimately help manage electricity bills, including, for example, when to store, sell, and buy electricity.
“Electricity markets are becoming more dynamic and decentralised. Consumers are looking for new products and services to meet their energy needs,” Ms Conboy said.
“The Ring-fencing guidelines support development of competitive markets, provide greater clarity and certainty in the market for new investment, and help to accelerate innovation and efficient investment,” Ms Conboy said.
“In developing these measures we have worked collaboratively with distribution network service providers, retailers, consumer advocates and other stakeholders to construct robust, best practice guidelines,” Ms Conboy said.
The extensive consultation process was valuable in ensuring the Guideline is well targeted, proportionate, and provides confidence to the competitive markets the Guideline is seeking to encourage.
About the AER
The Australian Energy Regulator regulates energy markets and networks under national legislation and rules in eastern and southern Australia, as well as networks in the Northern Territory. Its functions include:
- monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
- setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
- regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
- operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers;
- publishing information on energy markets, including the annual State of the energy market report, to assist participants and the wider community.