Market Review: Open

Overview

The AEMC is undertaking a review into the regulatory arrangements frameworks for stand-alone power systems under the National Electricity Law (NEL), the National Energy Retail Law (NERL) and associated rules. 
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The AEMC is undertaking a review into the regulatory arrangements frameworks for stand-alone power systems under the National Electricity Law (NEL), the National Energy Retail Law (NERL) and associated rules. 

A stand-alone power system (SAPS) is an electricity supply arrangement that is not physically connected to the national grid. The term encompasses both microgrids, which supply electricity to multiple customers, and individual power systems, which supply electricity to a single customer. 

This review, requested by the COAG Energy Council, will look at the law and rule changes required to allow local distribution network service providers to use SAPS where it is economically efficient to do so, while maintaining appropriate consumer protections and service standards. The review is also looking at regulatory arrangements for SAPS that are provided by parties other than local DNSPs. 

The terms of reference for the review sets out two priority areas of work:

  • Priority 1 is to develop a national framework to facilitate the transition of grid-connected customers to SAPS supply provided by the current distribution network service provider (DNSP), as well as a mechanism for the transition of grid-connected customers to third party SAPS supply. 
  • Priority 2 is to develop a national framework for the ongoing regulation of third party SAPS.

Consultation paper – Priority 2

On 1 March 2019 the AEMC published a consultation paper to invite initial stakeholder submissions on priority 2 of the review. 

The consultation paper seeks stakeholder views on the extent and scope of regulation of stand-alone power systems that are provided by parties other than the local DNSPs, such as other NEM participants, local councils and community groups. These systems are currently regulated in some jurisdictions by jurisdictional frameworks, and the jurisdictions will decide whether to transition current systems to the new arrangements.

The AEMC requests stakeholder submissions to the consultation paper by 29 March 2019.

Draft report – Priority 1

On 18 December 2018 the AEMC published a draft report for priority 1, setting out the AEMC’s analysis undertaken over the course of the review to date. It explains our developing views on mechanisms for transitioning customers to off-grid supply, the regulatory and commercial arrangements that would then apply on an ongoing basis, and the consumer protections that should be put in place.

The report includes two illustrative service delivery models as options for providing ongoing supply to off-grid customers after they have been transitioned away from grid supply. The AEMC received 28 stakeholder submissions on the draft report. These can be found below.

Next steps

Under the terms of reference, the AEMC is required to publish a final report for priority 1 by 31 May 2019, draft report for priority 2 by 30 June 2019, and a final report for priority 2 by 31 October 2019.

Related work

The Commission is concurrently working on updates to the regulatory framework for embedded networks, and the two workstreams will consider a number of related issues, particularly with regards to consumer protections. 

Background

The COAG Energy Council’s Energy Market Transformation work program, managed by the Energy Market Transformation Project Team (EMTPT), is considering the regulatory response to the emergence of SAPS as a viable option for providing electricity services to customers.

In general, SAPS are currently not captured under the national electricity frameworks.  SAPS are subject to jurisdictional legislative frameworks that vary in their comprehensiveness.  Queensland is currently the only state that applies the NERL retail protections to all off-grid electricity supply, and also applies the NERL distributor obligations to the 33 isolated systems run by Ergon Energy. 

While SAPS may provide benefits, regulation of these systems is justified for many of the same reasons as for standard supply from the national grid. Consequently there is now a need for more robust regulatory arrangements to be developed for SAPS.

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Documentation