AER decides to grant SA Power Networks a conditional ring fencing waiver

The AER has today published its decision to grant SA Power Networks a conditional waiver from the Ring-fencing Guideline regarding a temporary generation project requested by the South Australian Government.

Following consultation with interested parties, the AER has decided to waive SA Power Networks’ obligation to comply with clauses 3.1, 4.2 and 4.4.1(a) of the Guideline until 1 June 2020 in respect of the temporary generation project. This is on the following conditions:

  • that the generation capacity is only utilised for the purpose of avoiding load shedding for NEM operational purposes when there is no alternative generation available
  • it is only utilised at the direction of the Australian Energy Market Operator or the South Australian Energy Minister
  • it is fully funded by the South Australian Government, who also receives all revenues from the project, and
  • SA Power Networks cannot advertise or promote other merchant generation services.

SA Power Networks will be expected to comply with the Guideline in all other circumstances, and in all other respects.

The South Australian Government requested that SA Power Networks install the backup capacity by 1 December 2017 to meet demand in South Australia. The project is a temporary measure and will be decommissioned when the South Australian Government’s own new generation capacity is operational. The project is being fully financed by the South Australian Government and SA Power Networks is restricted in how it can use this capacity.

The Guideline requires each NEM distribution business to separate the regulated part from the contestable part of its business. The Guideline is currently in its implementation stage, with all distribution businesses asked to assess their current ability to comply and submit any necessary waiver applications, if need be, before full compliance is mandatory, from 1 January 2018.

Issued date: 
21 June 2017
AER reference: 
AC 81/17
General inquiries - Ring-fencing