The objective of the Ring-fencing guideline (electricity distribution) (the Guideline) is to:
- promote the National Electricity Objective by providing for the accounting and functional separation of the provision of direct control services by Distribution Network Service Provider's (DNSPs) from the provision of other services by them, or by their affiliated entities.
- promote competition in the provision of electricity services.
This Guideline imposes obligations on DNSPs targeted at, among other things:
- cross-subsidisation, with provisions that aim to prevent a DNSP from providing other services that could be cross-subsidised by its distribution services; and
- discrimination, with provisions that aim to:
- prevent a DNSP conferring a competitive advantage on its related electricity service providers that provide contestable electricity services; and
- ensure a DNSP handles ring-fenced information appropriately.
On 16 August 2019, we commenced a review of the Guideline (Version 2). The objectives of this review were to include ring-fencing interactions with stand-alone power systems (SAPS) and energy storage devices and to clarify some obligations and to make compliance less administratively complex.
On 3 November 2021 the AER published the final Guideline and explanatory statement (Version 3). DNSPs must comply with this version of the Guideline from 3 February 2022, 3 months after publication.
On 21 December 2021, the AER published a communications statement confirming our position on streamlined waivers and an accompanying waiver application template for DNSPs to use.