UPDATING THE REGULATORY FRAMEWORKS FOR EMBEDDED NETWORKS STAKEHOLDER WORKSHOP PRIMUS HOTEL, SYDNEY AND WEBCAST 22 FEBRUARY 2019
Agenda 1. Updating the regulatory frameworks for embedded networks - overview 2. Questions and answers Presentation and discussion 3. • Retailer framework • ENSP framework Presentation and discussion • 4. Market system integration • Network billing 5. Lunch break Presentations on roundtable topics • Legacy embedded networks 6. • Gas • Jurisdictional regulations 7. Breakout roundtables 8. Recap and next steps 2
UPDATING THE REGULATORY FRAMEWORKS FOR EMBEDDED NETWORKS - OVERVIEW UPDATING THE REGULATORY FRAMEWORKS FOR EMBEDDED NETWORKS 1. Updating the regulatory frameworks for embedded networks - overview Questions and answers 2. Presentation and discussion • Retailer framework 3. • ENSP framework Presentation and discussion • 4. Market system integration • Network billing 5. Lunch break Presentations on roundtables • Legacy embedded networks 6. • Gas • Jurisdictional issues Breakout roundtables 7. 3 Recap and next steps 8.
Overview • The AEMC has developed a package of draft • Timing of implementation of the proposed legislative changes to implement the framework – mid to end 2020 recommendations made in the 2017 Review o AEMC to finalise and provide its of regulatory arrangements for embedded recommended changes to COAG Energy networks, including: Council in mid-2019 for endorsement o drafting amendments to the NER and NERR o COAG Energy Council to progress and o drafting instructions for recommended implement law changes changes to the NEL and NERL o necessary amendments to jurisdictional • At this stage, the majority of proposed changes instruments to provide a complete set of would only apply to new embedded networks, consumer protections and safety regulations set-up after the introduction of the new regime o AEMO and AER will require a transitional • Potential transition of some legacy embedded period to consult on and update procedures networks discussed later in this workshop and guidelines 4
Benefits for consumers in embedded networks • I mproved consumer protections : • I ncreased access to retail competition: o increased protections in the areas of o network billing arrangements require ENSPs disconnections, billing information, payment to use standardised billing processes and options and notification of planned outages data formats to facilitate transactions with retailers o new protections in the areas of new connection services, customer hardship o extend NEM metering arrangements and programs and RoLR arrangements AEMO’s market systems to embedded networks, appointment of a metering coordinator at child connection points • Enhanced abilities for the AER to monitor • Changes recommended to jurisdictions ’ and enforce compliance of sellers in arrangements and regulations to improve embedded networks to provide these consumer protections access to concession schemes, independent dispute resolution and reliability protections 5
Impacts on costs and benefits of setting up embedded networks • The proposed changes aim to strike a balance • Differing impact depending on the entity between providing consumer protections providing the service, type of development and without placing undue costs on owners and number and types of customers: operators of embedded networks o large entities are of a scale similar to • The objective is to provide the right incentives retailers in the NEM and it is appropriate that and facilitate the establishment of embedded they bear compliance costs and risks in the networks where it is efficient to do so same way • All developments still have the option of o small entities , e.g. owners’ corporations or connecting directly to the LNSP’s network, a set of townhouses, may appoint a third which may be more cost effective than party with the necessary registration and establishing embedded network arrangements authorisation to minimise costs o continuing exemption of some small operators if they only supply temporary customers or are not undertaking the sale of energy 6
Recommended changes The new regime aims to elevate embedded networks into the national regulatory regime. The draft report sets out proposed changes in the areas of: • Registration and exemption • Market and system integration • Network billing • Connection services A new regulatory regime • Consumer protections in the NERL and NERR for embedded networks • Monitoring and compliance • Jurisdictional regulations 7
Registration and exemption • Creation of two new roles under the new • Reduced number of exemptions by clarifying framework: the term ‘distribution system’: o Embedded Network Service Provider o network activities currently subject to some (ENSP) , needs to register with AEMO and be deemed exemptions would no longer be subject to many of the existing regulatory considered to be a network activity under the requirements placed on DNSPs NER o Off market retailer , needs to obtain an o exemptions would only be retained for authorisation from the AER and be subject to exempt activities such as supply to some most requirements that existing authorised infrastructure sectors, EV charging stations retailers are subject to and temporary accommodation o Obligations relating to consumer protections o all exempt parties would need to register with and retail market competition would be the AER placed directly on these parties 8
Market and system integration • Under the proposed framework, the application • By making metering in embedded networks of the NEM metering framework will be consistent with the rest of the NEM, extended to embedded networks customers at off-market child connection points will • Off-market retailers and ENSPs will be responsible for o be ‘discoverable’ to all retailers, enabling o off-market retailers : appointing a them to make competitive offers and metering coordinator at their off-market child thereby improve access to retail market connection points competition o ENSPs : register all child connection points o have improved access to information with AEMO and maintain information in about their usage and bills AEMO’s systems 9
Network billing • Introduction of standardised billing • The proposed changes require ENSPs and arrangements for the recovery of external existing exempt network service network charges from embedded network providers to customers who choose to go ‘on-market’ o set network charges at a level no greater • For on-market customers the external network than what the customer would have paid had charges continue to be paid by ENSPs at the it been directly connected to the LNSP’s connection point to the LNSP’s network network (the ‘shadow price’) • Embedded network tariffs and billing o use standardised processes and data formats arrangements designed to allow alternative to bill retailers these charges for on-market retailers outside the embedded network to customers make a market offer to child connection points - without operating manual processes to • The proposed network billing arrangements do manage transactions with ENSPs not apply between ENSPs and off-market retailers in embedded networks 10
Connection services • The AEMC recommends that ENSPs should • AER - determination of connection charges have an obligation to make an offer to and dispute resolution customers seeking connection services o charges levied by the ENSP are proposed to • Under the proposed framework ENSPs would not be directly regulated by the AER (unlike be required to make an offer for new DNSPs’ charges), but charges should be connections and connection alterations within ‘reasonable’ their embedded network area o any disputes raised in relation to connection o unlike for DNSPs, the AER would design a charges would be resolved by the AER single connection policy for all ENSPs o the connection policy would need to accommodate differences between embedded networks 11
Consumer protections in the NERL and NERR • Customers in new embedded networks will be o the establishment of a modified RoLR customers of an authorised retailer, either a scheme is proposed, where the retailer at NEM retailer or an off-market retailer the parent connection point would become the RoLR if an off-market retailer becomes • This will enable consumer protections for embedded network customers to be closely insolvent, to provide continuity of supply aligned with those of standard supply and financial protection of retailers customers under the NERL and NERR • A number of minor amendments to the NERL and NERR are required to accommodate the broader relationships in embedded networks o retailer and distributor interruptions and life support arrangements will require the involvement and coordination of multiple network service providers and retailers 12
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