Network exemptions

Who must register or obtain a network exemption?

Do you allow anyone to take electricity from wiring you own, operate or control? If you do, you are operating a ‘private electricity network’. This is illegal without permission. Most registered or exempt onsellers will also need a network exemption. Read on.

Under the National Electricity Rules (NER), any party that engages in an electricity transmission or distribution activity must either be registered with the Australian Energy Market Operator (AEMO) as a network service provider (NSP) or gain an exemption from the requirement to be a registered NSP from the AER.

Network Exemption Guideline

To assist parties that require an exemption, the AER has issued an Electricity NSP Registration Exemption Guideline (Network Exemption Guideline).

The types of networks covered by the Guideline include situations where electricity supply is incidental to the main purpose of a business, such as networks within caravan parks, apartments, industrial parks and shopping centres. It also deals with a wide range of industrial, commercial and primary production situations. The Guideline sets out the AER’s approach to network exemptions, including a full list of the types of activities which are exempt from the requirement to register as a NSP.

The Guideline will help you understand:

• who needs to register for an exemption (Section 2.2)
• which type of exemption you need – deemed, registrable or individual (Section 2.3)
• how to get an exemption (Section 2.5)
• the conditions exemption holders must comply with (Part B).

You must hold a network exemption for each site where you own, operate or control a private electricity network. If you are required to register exemptions for a site at which there are multiple gate meters, you must include the NMI for each meter in the registration form in the field titled 'Parent/Gate meter NMI'. You should also reference in the address details, how many NMIs are at the site, for example:

2-4 Smith Street (3 gate meters)
Smithfield 9000

A network exemption can relieve you of the requirement to comply with certain technical requirements set out in Chapter 5 of the NER, and the obligation to provide other network users with access on demand to the network.

As noted earlier, if you also sell energy to customers within a private network, you also require a retailer authorisation or an exemption from the requirement to have a retail authorisation. These are also administered by the AER. The AER’s Retail exempt selling guideline contains information on retail exemptions, including a full list of the classes of retail exemption available. The AER has a common registration process for both types of exemption to make this process a little easier.

Inquiries about exemptions should be e-mailed to AERExemptions@aer.gov.au.

Exemption classes

The Guideline defines three broad classes of network exemption:

• Deemed exemption
• Registrable exemption
• Individual exemption

Deemed exemption

If you are eligible for a deemed exemption, you do not need to submit an application or to register your activities with the AER. Instead, you are ‘deemed’ to fall within a particular class of exemption. However, you still need to comply with the conditions attached to the relevant class of deemed exemption as listed in the Guideline.

Registrable exemption

If you are eligible for a registrable exemption, you must register your network activities with the AER by completing the online registration form and submit it to the AER. You will need to comply with the conditions attached to the relevant class of registrable exemption. The public register contains a list of persons currently holding registrable exemptions.

Individual exemption

If your network activities do not fall under one of the AER’s classes of exemption, or if you are seeking a variation of conditions otherwise applicable to one of the defined classes of exemption, you must apply to the AER for an individual exemption. The AER will assess applications for individual exemptions on a case-by-case basis. To apply for an individual exemption, please contact the AER. The public register contains a list of persons currently holding individual exemptions

The holder of an individual exemption must comply with the conditions attached to that exemption unless specifically varied by a decision of the AER. As the conditions govern matters where industry wide standards apply such as pricing, safety, metering and dispute resolution, applications to vary conditions will need to make compelling argument for a change to be allowed. These applications must demonstrate how the customers of the network will be better served if a condition is varied. Changes which are merely convenient for the applicant are unlikely to be approved.

Classes of network exemption and applicable conditions

Exemption conditions

All exempt networks are subject to conditions to ensure appropriate consumer protections are in place for the customers they serve. These conditions cover access to retail competition, safety, dispute resolution, metering and pricing. Even if your network is in a ‘deemed’ category, if you fail to observe the relevant conditions your exemption will be invalid and you will be operating illegally. This may expose you legally to a civil penalty (a fine) under the National Electricity Law or other relevant legislation. The conditions are in Part B, Section 4 of this guideline.

The conditions cover obligations on matters such as:

• the provision of information to customers
• joining the approved customer dispute resolution scheme
• retail competition
• safety
• metering
• pricing.

Dedicated connection assets

Dedicated connection assets (DCAs) are privately owned and operated connection assets that provide the services required to connect a party to the shared transmission network. A DCA connects a party to the shared transmission system at a single connection point and can be isolated from electricity flows on the shared transmission network, e.g. the power line that connects parts of a substation to a generating system.

The National Electricity Rules (NER) require the AER to publish a register of existing DCAs and AER approved Dedicated Connection Asset Service Provider access policies.

Public register of exemptions

Parties who hold an individual or registrable exemption will appear on the AER's Public register of exemptions. The Public register contains additional information including the location of the exempt network, the class of exemption, the date the exemption was granted and applicable conditions.