The Australian Energy Regulator has today published a Draft Ring-fencing Guideline that is designed to prevent network businesses from shifting costs into their regulated business or taking unfair advantage of their regulated position in the energy market.
The AER’s Draft 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.
DNSPs have privileged access to information as well as regulated returns on their investment. The AER Draft Guideline aims to prevent cross-subsidies from regulated business activities or discriminatory treatment in favour of affiliated businesses providing an unfair advantage over other companies competing in the market.
“The Draft Guideline will level the playing field and allow the benefits of competition to give consumers more choice and allow them to find the offer that best suits their needs,” AER Chair Paula Conboy said.
“Electricity markets are becoming more dynamic and decentralised. Consumers are looking for new products and services to meet their energy needs. The AER is reviewing the regulatory frameworks to ensure that consumers benefit from new energy technologies.”
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.
Background
The AER issued a Preliminary Positions Paper in April. The Draft Guideline responds to issues raised in submissions by industry and other stakeholders. These included ensuring that the Guideline is well targeted, proportionate, and provides confidence to the competitive markets the Guideline is seeking to encourage.
Submissions on the Draft Guideline are due by 28 September 2016.
The Guideline is due to be completed before 1 December 2016.