Applicable conditions for exemption classes NRO1 - NRO5 (Historical)

The following conditions applied to registrable exemption classes NRO1 through NRO5 prior to 27 August 2013.  Current applicable conditions for exemption.

General Requirements

  1. All meters used for the measurement of electrical energy whether delivered to, or exported by, a customer must comply with the requirements of the National Measurement Act and regulations made under that Act for electricity meters and sub-meters and with the requirements set out in schedule 7.2 of the NER.
  2. All customers must be individually metered except where the AER has determined an unmetered supply is permitted.
  3. All private networks must, at all times, be installed, operated and maintained in accordance with all applicable requirements within the jurisdiction in which the network is located for the safety of persons and property, including where relevant an industry Code or Guideline otherwise applicable to a network service provider providing similar services. This includes, where applicable, an obligation to have current, and/or maintain, a safety management plan or similar, whether registered or unregistered with a competent safety authority or regulatory agency within that jurisdiction.
  4. Any generation source located within a private network must be designed in the event of a loss of supply from the local network service provider’s network either to shutdown entirely or must disconnect from that other network (i.e. ‘island’) and not reconnect except in accordance with arrangements approved by the relevant NEM registered network service provider.
  5. All onselling conducted within a private network must be undertaken by:
    - a registered market retailer; or
    - by the holder of a valid retail exemption registered with the AER; or
    - by a party or parties entitled to a deemed retail onselling exemption in accordance with the current AER Exempt Selling Guideline.
  6. A private network must have in place approved dispute resolution procedures which customers can access at no cost or on a fee for service basis. Where retail onselling is occurring under the Retail Law and a dispute resolution mechanism is available under that Law, the same arrangement may apply for the resolution of disputes. In all other circumstances a suitable dispute resolution mechanism must be specified in the formal agreements between the network owner (or its appointed agent) and the end-use customer.
  7. Where a single customer has energy delivered to adjoining sites (not necessarily adjacent sites) or to multiple exempt sites within a jurisdiction and the sites are subject to a common supply arrangement and suitable metering is installed, meter readings for that customer may be aggregated for corresponding time periods.
  8. Applications for exemption are personal to the applicant. They are not transferable. No application is required for a deemed exemption. Registrable exemptions require minimal effort for a new proprietor of an existing registered exempt network to obtain and therefore an application for registration is to be made within 10 business days of acquiring a requirement to register
  9. The AER may revoke or amend an exemption at any time or may vary the conditions from time-to-time. If the AER does so it will notify a registered applicant using the registered contact details or otherwise, in accordance with the procedures set out in the NER.
  10. Where notified by a customer (‘life support customer’) of the existence of a requirement to maintain supply for life support equipment, the private network operator must, without undue delay, promptly notify the local DNSP of the existence of a life support requirement in accordance with the reasonable requirements of the local DNSP.
  11. A private network operator must not disconnect supply to a life support customer without making arrangements for the safety of a life support customer.

Metering installation

The following requirements relate to all new installations and to any reconfiguration of a metering installation within an existing private network.

Metering at the connection point to the NEM is to be determined in conjunction with the relevant transmission or distribution network service provider’s requirements for connection of a customer.

Network owners and operators must ensure that all metering installations used in private networks are fit for purpose and compliant with the requirements of the National Measurement Act, which is administered by the National Measurement Institute and the regulations in force under that Act. The AER does not require an existing metering installation to be upgraded; however, in the event of a billing dispute it will be incumbent on the network operator to demonstrate that the metering installation is accurate.

Transmission networks:

Regardless of whether a network is registered with AEMO or exempted from registration by the AER, all metering in electricity transmission networks must be installed in accordance with all reasonable requirements of AEMO and additionally, in accordance with the requirements specified in a connection agreement with a network service provider.

Distribution networks:

In all distribution situations meters must either:

  1. be installed in a reasonably accessible location with safe, convenient and unhindered access to facilitate meter reading, testing and meter maintenance; or
  2. in private networks serving only private network customers, meters may have remote facilities to permit access to current metering data either by a readout device or by electronic means including via a web portal or other equivalent facility.

The metrology procedure and technical standards applicable to a metering installation remain subject to the laws of the jurisdiction in which the installation resides.

Off-market and on-market energy generation

All off-market and on-market energy generation installations, whether connected directly or indirectly to a NEM distribution network, must be metered in accordance with the applicable requirements for direct connection to the NEM distribution or, where applicable, transmission network.

A word of caution: Generator installations within private networks do not necessarily enjoy full access to government incentive schemes. A generator not directly connected to the NEM may have no access, or restricted access, to government or industry incentive programs that otherwise apply to other similar installations connected to a NEM registered service provider In particular, access to premium feed-in tariffs may be problematic for such generators.

It is not intended that small generator installations within private networks should be exposed to unduly onerous metering requirements. For generator installations less than 1MW and with a peak kilowatt capacity less than the average energy demand of the private network (or as otherwise varied by agreement with the local distributor) adequate metering may be determined in consultation with the relevant NEM registered service provider. For small
installations this may involve a bidirectional meter installed at the connection point to the local distribution network.

Further details of metering requirements must be obtained from the local electricity distribution or transmission network service provider. Additional requirements of AEMO also apply to generator installations larger than 30MW.

Electric vehicle charging facilities

This classification only applies to a private network with a vehicle charging facility owned by another party connected to it. An exemption is required by the private network owner/operator if the private network sits between the DNSP and the charging facility. On the other hand, if the vehicle charging facility is directly connected to the NEM it will be directly metered by the local DNSP. Wherever there is a direct one-to-one relationship between the DNSP and the charging facility no network exemption is required. Note that the supply of electricity from a charging facility to a vehicle is a service to the transport sector, which is not regulated by the AER. As this is a deemed exemption category no application is required for exemption. Where the facility operates only as a load, metering and charging arrangements within the private network may be determined by agreement between the network owner/operator and the proprietor of the charging facility. If no agreement is reached then the conditions set out in sections 5, 7, 9 and 10 are to apply. A facility which includes a capacity to export electricity into the local distribution network must also comply with the metering requirements in clause 6(4) for energy generation sources.

Metering accuracy

Meters used within private networks must be pattern approved, consistent with the requirements of the National Measurement Act and regulations made under that Act, in accordance with the equivalent requirements for NEM electricity meters and to accuracy classes as stipulated in schedule 7.2 of the NER, unless otherwise exempted by the National Measurement Institute.

AEMO & NEM requirements

Billing and settlement of meters in an embedded (i.e. private) network is a complex area. In networks where none of the customers obtain supply from a NEM registered retailer there is not an immediate need to apply the unique metering identifiers issued by the local DNSP and record these in the market settlement system operated by AEMO. However, where a customer within a private network obtains supply from a NEM registered retailer there is an immediate need for the ‘child’ meter for that customer to be recorded in the metering and settlements system. The following conditions apply to a private network in jurisdictions where customers of private networks have access to full retail competition and where a customer has elected to obtain supply from a NEM registered retailer:

  1. Metering arrangements for customers obtaining supply from a NEM registered retailer must comply with all applicable AEMO requirements for, the installation and maintenance of a metering installation, the registration of meters, provision of metering data and, where necessary, the transfer of the customer to another retailer. This includes the requirements published by AEMO in a metrology procedure or in a Guideline applicable to a private network. A private network operator is required to permit reasonable access to an accredited metering service provider or a registered NEM participant or an agent, as appropriate, appointed by the ‘Responsible Person’ for the provision, installation, registration, reading and maintenance of the metering installation.
  2. All owners and operators of private networks must comply with the reasonable requests of a local Distribution Network Service Provider (DNSP) for demand forecasting data, relevant details of the physical network infrastructure and assets and any other data relevant to the control, operation or maintenance of the network.
  3. Electrical networks may be subject to mandatory load shedding requirements in emergency situations, in accordance with the NER. This requirement will generally be specified by the local DNSP in the connection agreement for the connection to the NEM system.

Distribution loss factors

Distribution loss factors (DLFs) are governed by clause 3.6.3 of the NER. Under clause 3.6.3(b)(2)(i)(B) a ‘small load’ is any load or a collection of loads which, in total, is less than 10MW peak demand or 40 GWh per annum.

In private networks which in aggregate constitute a ‘small load’ and which serve a number of smaller loads (‘children’) the AER considers that network losses within the network will generally not be of sufficient magnitude to warrant adopting a DLF within the network that is different to the DLF that would be applied by the local DNSP at the metered point of connection, where practicable, or the DLF otherwise applicable to the connection of the embedded network to the local distribution network — i.e. at the ‘parent’ meter. However, although the children may each be small loads, the combined loading may result in an embedded network becoming a significant load, in which case clause 9(2) or 9(3) will apply.

  1. For small loads the appropriate DLF applicable to the ‘child’ meters within the installation is the DLF as would be determined by the local DNSP. This approach will relieve the operator of a private network of the requirement to calculate and seek annual approval of a DLF for the child meters within that network.

For larger loads, generators and site specific loss factors:

  1. Clause 3.6.3(b)(2)(i) of the NER applies to the calculation of a DLF for large loads and generators connected to a network. In private networks involving loads or generators otherwise described in clause 3.6.3(b)(2)(i) a site specific DLF for those loads or generators must be calculated in accordance with clause 3.6.3(b)(2)(i) using the methodology published for this purpose by the local DNSP.
  2. Where the methodology of the local DNSP is not suitable for the calculation of a site specific DLF for any reason, the network operator and the connecting party may jointly approach the AER and seek approval of an alternative methodology for determining the applicable allocation of electrical losses between the parties. Approval by the AER will be subject to there being no material impact on the rights of another party as a consequence of the alternative mechanism.

Note that DLFs, including site specific DLFs, must be approved annually by the AER in accordance with the NER, clause 3.6.3(i).

Pricing

The following paragraphs describe predefined pricing arrangements accepted by the AER for network charges in private networks. Acceptance by the AER of a network charging mechanism is predicated on a requirement that there must not be a sustained over-recovery of any network charge. Where an over-recovery occurs, it is required to be rebated to customers at intervals of not more than annually. Note that the energy component of any charge is subject to the Exempt Selling Guideline.

External network charges

External network charges may be levied by a registered NEM network service provider and charged to the parent meter of a private network. These charges are known variously as ‘transmission use of system charges’ (TUOS), ‘distribution use of system charges’ (DUOS) and ‘network use of system’ (NUOS) charges depending on the State in which the network is located. Such charges may be apportioned to each customer in a private network on a ‘causer pays’ basis in proportion to the metered energy consumption of each customer over the equivalent period no matter which charge group or groups apply (see Table 6 of the Network Guideline). Alternatively, the charges borne by each customer may be determined on a ‘shadow price’ basis. In this context a ‘shadow price’ is charging each customer a tariff no greater than the tariff that would have applied had that customer obtained supply directly from the local NEM registered distribution or, where appropriate, transmission company.

Internal network charges

The AER does not encourage separate network charges for private networks. Few, if any, situations currently exist where such charges are warranted. The formal determination ofnetworks charges by the AER is a complex and involved process, the costs of which will usually be disproportionate to the scale of a private network.

Charge group Description Applicable situations
Network charges - Applicable charging groups
A Bundled energy and external network tariff All retail onselling
B No additional network charge Unrestricted
C Value added services
  • Eligible private networks only. Restricted application (see text).
  • Charging mechanism for network charges is specified in a commercial agreement.
D Separate charge for private network facilities
  • Registered and individually exempted networks.
  • Pricing determined by the AER.
E Rebate for exported energy Unrestricted

 

Group A

May apply to any retail onselling situation where customers are charged an energy only charge or all-inclusive tariff which includes external network charges. Many energy consumers are ultimately concerned with the overall expense of their energy consumption. The critical point of comparison in this situation is the bundled price of energy and network charges. The AER considers that bundled tariffs which include all network charges are unlikely to be contrary to the long term interests of consumers.

Group B

No charge is made for the private network assets. May apply in any private network situation.

Where an embedded network exists within a commercial building, shopping centre, retirement village or the like the AER considers the network development costs to have been met in the initial establishment of the facility. Such costs are capital in nature and are normally recoverable through lease payments, fit-out charges or the like. A charge for network services is not appropriate as it may result in the customer being charged twice for the same facility. Accordingly, no charge is permitted for energy network services.

Note that the agreed cost for the establishment or upgrade of a network to meet customer requirements may still occur in accordance with a bona fide lease or ancillary agreement between the network owner, operator or controller (as appropriate) and the network customer. Such charges may be subject to normal commercial financing arrangements.

Group C

Applicable to network charges for exempt network classes NDO1, NDO2, NDO3, NDO4, NDO5, NR5, NRO1, NRO2, NRO3 and NRO4 and individual exemptions approved by the AER in accordance with section 12 of this Guideline. The network proprietor provides additional services to customers of the network such as on-site fault repair services. This group is intended to apply to commercial, industrial and mining situations and private networks serving large customers or on-site generation exporting to the NEM. Where it can be demonstrated that access to the NEM would not otherwise be available except at significant cost to the affected customers, the network may also service supporting infrastructure, isolated communities, emergency services, farms and pastoral holdings and unrelated loads including small customers or generators on reasonable commercial terms.

Group D

Exemptions in this category will only be contemplated in exceptional circumstances and require individual approval by the AER in accordance with section 12 of this Guideline. Parties wishing to earn a commercial return on network assets should generally be registered as a network service provider and be subject to the operation of chapter 6 or chapter 6A of the NER. Applicants in this charge group would need to demonstrate that NEM registration and compliance costs would be disproportionate to the size of the community to be served by the network and that compelling grounds exist for an exemption to be considered.

Group E

Where a generator within a private network earns credits for energy exported to the NEM all credits remain the property of the embedded generator. All credits must be rebated to the embedded generator or, if more than one, to each embedded generator in proportion to the credits earned. This requirement does not prevent the embedded generator from entering into an agreement with another party to reallocate those credits.