The AER has published its draft Electricity Distribution Ring-fencing Guideline (the guideline) and explanatory statement. We are seeking submissions on the draft guideline, and will hold a public forum.
The draft guideline proposes to:
- Allow distribution network service providers (DNSPs) to provide the generation services for DNSP-led stand‑alone power systems up to a specified revenue cap;
- Allow DNSPs to provide contestable services with batteries where a waiver is granted by the AER. Our draft guideline and explanatory statement provide further guidance where a DNSP may apply for a waiver where it wants to supply excess capacity of batteries to third parties.
Ring-fencing separates regulated services from contestable services to promote the development of competitive markets. In updating the guideline, we are balancing between allowing DNSPs to provide services in emerging markets while guarding against potential threats to competition in these emerging markets.
The draft guideline also clarifies and improves certain existing obligations to make the guideline clearer and simpler.
Invitation for submissions
We are now seeking submissions from interested stakeholders on our draft guideline and explanatory statement by 8 July 2021.
The AER will host an online forum on 9 June 2021 for interested stakeholders. To register please email your name, organisation and email address to AERringfencing@aer.gov.au by 7 June 2021. All registered stakeholders will receive more information closer to the online forum.
Ring-fencing supports competition in markets for electricity services and the efficiency of regulated network services provided to consumers on a monopoly basis. It does this by requiring a network business to separate parts of its business that provide regulated services from the parts of its business that provide unregulated services.