Changes to Network Exemption Guidelines for dedicated connection assets, embedded generator connections and more

On 1 March 2018 the Australian Energy Regulator (AER) released Version 6 of the Electricity Network Service Provider - Registration Exemption Guideline (the Network Exemption Guideline). Version 6 of the Network Exemption Guideline replaces Version 5, released in December 2016. The Network Exemption Guideline sets out the categories of network activities that are exempt from the requirement to register as a distribution or transmission network service provider, together with the conditions imposed under each exemption category. Recent updates were also introduced to the AER's Retail Exempt Selling Guideline which we have summarised here.

The changes in Version 6 primarily relate to a new requirement to register dedicated transmission connection assets to facilitate open access to transmission networks. In addition to these changes, the Network Exemption Guideline also implements changes to:

• generator and battery connections supplying more than 5MW into the NEM; and
• protections for energy consumers.

Who is affected by the changes to the Network Exemption Guideline?

The Network Exemption Guideline is relevant to you or your business if you own, operate or control an electricity network which supplies electricity to a third party, and you don't want to register with the AER as a network service provider. Relevant networks range from small networks within a single building (such as shopping centres) to rail networks and large rural networks serving primary production facilities.

Under the National Electricity Law, it is illegal to own, operate or control an electricity network unless

• the party is registered with the Australian Energy Market Operator (AEMO) as a distribution or transmission Network Service Provider (NSP); or
• the activity is exempted from registration by the AER.

What is new in relation to transmission dedicated connection assets?

In May 2017 the Australian Energy Market Commission's Transmission Connection and Planning Arrangements Rule Determination (the TCPA Rule) announced changes to the National Electricity Rules (NER) to facilitate an open access regime for generators or large loads to connect to transmission networks through privately operated connection assets. As required by, and to give effect to, the TCPA Rule, the AER is amending the Network Exemption Guideline to add exemption classes for small and large transmission system "dedicated connection assets". These are connection assets dedicated to a party connecting to the national electricity grid, which are used to connect a connecting party to the shared transmission network and which, once commissioned, are able to be isolated from electricity flows on the transmission network. An example of a dedicated connection asset is the power line that connects parts of a substation to a generating system.

Owners, operators and controllers of transmission system "dedicated connection assets" are now required to register with the AER for an exemption from the requirement to register as a NSP in respect of a "dedicated connection asset". The AER will publish a list of those registered for the relevant exemptions.

The publication of this information is aimed at providing greater transparency for Registered Participants in the NEM, market bodies and interested parties about these assets, their location, size, and who owns, operates and controls them, as well as their status under the NER.

If the dedicated connection assets have a total route length of power lines of more than 30km they are considered "large". The owner, operator or controller of large dedicated connection assets is required to:

• prepare, submit to the AER for approval and publish an access policy to provide a framework for applicants to obtain access to the dedicated connection assets; and
• comply with the approved access policy and negotiating principles mandated in the NER if an applicant seeks access to the dedicated connection assets.

What's new in relation to generator and battery connections?

AEMO had identified concerns about an increasing number of hybrid generating systems supplying power into the NEM through connections on exempt or embedded networks in circumstances where they don't meet the generator performance standards. In response, the AER has amended the Network Exemption Guideline with the effect that network exemption holders will have to consult with AEMO in relation to the safe, reliable or secure operation of their network if:

• the network operates at a normal voltage of 11kV or more; and
• the exemption holder has commissioned, or plans to commission, the installation of a generation asset that, in aggregate, will supply 5MW or more into the NEM.

What's new in relation to protections for energy consumers?

The Network Exemption Guideline has also been updated to:

• require additional information in relation to the name of any appointed Embedded Network Manager to be included on a customer's bill;
• harmonise the dispute resolution requirements with the Retail Exempt Selling Guideline which provides referral to Ombudsman dispute resolution; and
• clarify that more frequent billing cycles or meter reads than monthly cycles are not prohibited, but levying additional meter reading charges for more frequent meter reading is only possible with the consent of the customer, which may be withdrawn at any time.

What you need to do now to comply with the Network Exemption Guideline

If you are an owner, operator or controller of an embedded electricity network or any other form of electricity network which supplies electricity to a third party (and you are not registered as a NSP in relation to that network), you will need to consider how the recent changes to the Network Exemption Guideline impact your network.

The biggest impact is on businesses which have dedicated transmission connection assets, as you will now need to register for an NSP exemption in relation to those assets.

Further, if the length of the power lines in your dedicated connection asset is greater than 30km, you will also need to prepare an access policy and negotiate with third parties seeking access to your assets in accordance with the NER.

Related Insights

• New dispute resolution and customer protection requirements for exempt energy sellers now in effect