The Network Exemption Guideline incorporates amendments that aim to support and facilitate increased access to retail competition by embedded network customers.
On 1 December 2016 the Australian Energy Regulator (AER) released a new Electricity Network Service Provider Registration Exemption Guideline which impacts the owners and operators of embedded networks. It commenced that day.
Does this impact me?
The Network Exemption Guideline applies to the new and existing owners/operators of embedded networks that are exempt from registration as a network service provider (Exempt NSPs).
Why the update?
The Network Exemption Guideline replaces the previous version released by the AER in August 2013.
It was produced in response to the Australian Energy Markets Commission's (AEMC) National Electricity Amendment (Embedded Networks) Rule 2015 (No. 15, December 2015), which:
- aims to improve access to retail competition for customers in embedded networks; and
- required the AER to revise the August 2013 NSP Registration Exemption Guideline by 1 December 2016.
Accordingly, the Network Exemption Guideline incorporates amendments that aim to support and facilitate increased access to retail competition by embedded network customers. A key change in the Network Exemption Guideline is the introduction of a new role: an accredited service provider known as the Embedded Network Manager (ENM).
The role of the Embedded Network Manager
The ENM is a new accredited service provider created by the AEMC's rule determination. The role of the ENM is highly technical and specialised, and can only be carried out by a qualified service provider who has achieved an Australian Energy Market Operator (AEMO) accreditation. The accreditation will be available from March 2017, and the AEMO and will maintain a register of accredited ENMs. The accreditation requirements for ENMs have not yet been published.
The ENM is responsible for facilitating embedded network customers access to retail market offers. This will involve technical functions such as ensuring that the metering installation is correctly recorded in the market settlement system, ensuring that child meters are approved and correctly registered, and the performance of market interface functions that link embedded network customers to the NEM systems.
The costs of the ENM are to be absorbed by the Exempt NSP.
Retailer of choice
The ENM requirements only apply in States and Territories where exempt customers are eligible to purchase energy from a retailer of choice through parent-child metering.
Currently only Victoria1, New South Wales and South Australia permit customers in private networks to exercise a right to choose their electricity retailer and have metrology procedures in place to facilitate access to retailer of choice. Exempt NSPs in other States and Territories should monitor the progress and implementation of any regulatory changes that facilitate access to retailer of choice.
When do I need to appoint an ENM?
An ENM is to be appointed for each site, so if an Exempt NSP owns or operates several sites, each must have a separately appointed ENM.
An Exempt NSP will need to appoint a ENM if certain 'trigger conditions' are met.
For activity classes ND10, NR1, NR2, NR3, NR5 and NR6, with 30 or more customers (and not subject to a community based group non-appointment or reversion entitlement), an Exempt NSP must appoint an ENM by:
- for existing networks - 1 December 2017; or
- from 1 December 2017, immediately on commencement of the networks operation.
For other classes, the AER has determined that the cost will outweigh the benefits of appointing an ENM.
However, for all other networks with 29 or fewer customers, the requirement to appoint an ENM will be triggered when a customer notifies the Exempt NSP that it intends to access retail competition, it has signed a market retail contract, and the cooling-off period for the market retail contract has expired.
There are separate processes and triggers for customers in eligible community-based groups.
Other changes in the Network Exemption Guideline
The Network Exemption Guideline contains several other updates, including (but not limited to):
- Metering: The Network Exemption Guideline addresses the requirements for compliance of child meters, including who has responsibility for upgrading and installing meters and in what circumstances. It also includes a mechanism for access and compensation in relation to customers that elect to access a market retailer and need to use or replace the Exempt NSP's existing meters.
- Charges: Several updates have been included in the Network Exemption Guideline to clarify the charges that can be recovered from different types of customers.
- Dispute resolution: Exempt NSP's dispute resolution processes must now, at a minimum, comply with AS/NZS 10002:2014 Guidelines for complaint management in organisations. Exempt NSPs must now also consider and advise tenants of the availability of external dispute resolution bodies in the relevant State or Territory (for example, a State or Territory tribunal or ombudsman).
Implementing the changes in the Network Exemption Guideline
Exempt NSPs should prepare strategies to implement the changes contained in the Network Exemption Guideline, and in particular, should consider how and when you may be required to appoint an ENM.
Please contact us to discuss how the Network Exemption Guideline will affect your embedded network and operations.
1 Note that Victoria has not fully adopted the National Energy Customer Framework.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.