Following our webinar on the topic last week (which you can watch at https://zoom.us/recording/share/jBd95cUmW_4wZ9fGoZMqnXaJEe-kDAaVBhehvD2pp7uwIumekTziMw?startTime=1551409241000)), we had a range of questions. As those questions will be of interest to a wide range of people, we offer our responses here.

By Dr Drew Donnelly, Compliance Quarter. 

All references are to AEMC’s draft report ‘Updating the regulatory frameworks for embedded networks’ available at https://www.aemc.gov.au/market-reviews-advice/updating-regulatory-frameworks-embedded-networks. We encourage you to make submissions on this report soon as they close on 14 March.

  1. Can the embedded network owner or operator pass on the costs of appointing the Embedded Network Service Provider (ENSP) and the Off-Market Retailer?

The proposed new framework will require the entities which own and operate new embedded networks to register with the Australian Energy Market Operator (AEMO) as an ENSP and as an authorised Off-Market Retailer.  In certain circumstances an intermediary or third party will be able to provide these services in place of the owner or operator of the embedded network. There is no proposed regulation as to how these costs may be passed on and to whom (p57).

  1. Will all ‘new’ embedded networks have to be built with market facing meters, in all sites, already installed for customers to go ‘on market’ if they so desire?

Yes. New embedded networks, that are requited to appoint an ENSP, will be required to have National Electricity Market (NEM) compliant metering as well as comply with Chapter 7 of the National Electricity Rules (p60).

The off-market retailer for that embedded network will be required to appoint a Metering Coordinator who in turn appoints a Metering Provider who will be responsible for the actual installation of NEM-complaint metering.

  1. Can the cost of a new metering installation be passed on to the customer?

For new embedded networks, who will be required to install NEM-compliant metering (i.e. smart meters), the existing rules in relation to updating a metering installation will apply. The retailer will be able to pass on the cost of a new meter to the customer in a variety of ways including a lump sum, a monthly fee or incorporating the cost of providing new meters to customers as part of the electricity usage charges. For more information see https://www.aer.gov.au/consumers/my-energy-service/smart-meters.

For legacy embedded networks, if they are transitioned to the new framework (which is yet to be determined), the metering will need to be NEM-compliant, if it is not already. There is no mention yet of whether there will be any restriction in passing on the cost of upgrade to customers.

  1. Is the creation of a child NMI the job of the newly created ENSP?

In embedded networks that are required to appoint an ENSP, then it will be the responsibility of the ENSP to create the child National Metering Identifier (NMI) through an ‘MSATs Change Request’ – the name for the AEMO’s market interface system.

  1. Who decides who will be the ‘local embedded network retailer’? 

Under the new framework, for a new embedded network, in its registration as an ENSP, the ENSP will be required to nominate an off-market retailer as the ‘local embedded network retailer’. The consent of that retailer will be required before doing so (p40).

  1. What about small to medium-sized businesses versus large enterprises? Will the rules be the same?

The proposed new requirements for registration as an ENSP and as an off-market retailer would apply equally to a small business or medium-sized business as to a larger businesses. However, the AEMC does point out that its proposal:

“grants the AER discretion in relieving an applicant from some conditions, which substitutes for the current individual exemption regime. The Commission considers that the AER may, for example, determine to exempt some NEM retailers or off-market retailers from a sub-set of obligations based on their customer type or size.” (p54).

  1. Under the new embedded network regulatory environment where there would be a requirement for a ‘legacy’ exempt retailer to become registered as on Off Market retailer, will there be a requirement for legacy customers to provide explicit informed consent (EIC) to transition to the new entity?

The AEMC have not yet come to a recommendation on this. While there is a proposal in the new framework that EIC will be required before transfer from an exempt seller to an authorised retailer (p57), at the time of the commencement of the new framework it is likely that legacy embedded networks that require authorisation, will already be authorised

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