The AER has reviewed AusNet Services' ring-fencing compliance report for the 2017 regulatory year, and the accompanying independent assessment of compliance undertaken by EY. The reports have provided confidence to the AER that AusNet Services has established a set of compliance controls that meet the DNSP's obligations under the Electricity Distribution Ring-fencing Guideline. AusNet Services reported no breaches of the Ring-fencing Guideline for the 2017 regulatory year.
2017 was a transitional year ahead of the 1 January 2018 compliance deadline, to allow DNSPs to make the changes necessary to achieve compliance with the Ring-fencing Guideline. In view of this, we allowed AusNet Services to conduct independent assessments of ring-fencing compliance status as at 31 December 2017, rather than for the whole year. We also allowed Victorian DNSPs to conduct independent assessments on the basis of limited assurance. Of the five Victorian DNSPs, only AusNet Services opted to conduct their independent assessment on the basis of reasonable assurance. This higher level of assurance associated with the independent assessment has provided a greater level of transparency into AusNet Services' compliance status.
Background
The Ring-fencing Guideline requires DNSPs to separate their regulated business activities, costs and revenues from other unregulated services. In doing so, the Ring-fencing Guideline aims to promote competition and consumer choice in contestable markets for electricity services, and it aims to ensure efficient costs in the delivery of regulated network services by DNSPs. The Ring-fencing Guideline was published on 30 November 2016. All DNSPs were required to comply with obligations in the Ring-fencing Guideline by 1 January 2018.
Under the Ring-fencing Guideline, DNSPs are required to prepare an annual ring-fencing compliance report each regulatory year, accompanied by an assessment of compliance by a suitably qualified independent authority.
All DNSPs are required to submit ring-fencing compliance reports and accompanying independent assessments of compliance to the AER with four months following the end of the regulatory year to which the compliance report relates. As Victorian DNSPs’ regulatory year aligns with the calendar year, Victorian DNSPs submit their compliance reports by 30 April each year. All other DNSPs, whose regulatory years align with the financial year, must submit annual reports and accompanying independent assessments of compliance to the AER by 30 October each year.