The AER has reviewed CitiPower/Powercor's ring-fencing compliance report for the 2017 regulatory year, and the accompanying independent assessment of compliance undertaken by Deloitte. The reports have provided confidence to the AER that CitiPower/Powercor have established a set of compliance controls that meet the DNSP's obligations under the Electricity Distribution Ring-fencing Guideline. CitiPower/Powercor reported several breaches of the Guideline that took place in the 2017 regulatory year. We deem these to be non-material breaches and are satisfied with the actions that CitiPower/Powercor has take to remedy the breaches. We will monitor any future similar breaches.
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 CitiPower/Powercor to conduct independent assessments of ring-fencing compliance status as at 31 December 2017, rather than for the whole year. We also allowed CitiPower/Powercor to conduct independent assessments on the basis of limited assurance. In the future, DNSPs will be required to conduct independent assessments on the basis of reasonable assurance, which provides a higher level of assurance.
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.