June Energy Update: National Energy Guarantee Detailed Design

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Regulation for the National Electricity Market jurisdictions (Queensland, New South Wales, Victoria, Australian Capital Territory, South Australia and Tasmania) is complex. In any given month there are often dozens of consultations initiated, and many more important announcements that energy businesses need to be on top of. Furthermore, there is no central repository of that information. That is why every month we provide a regulatory update informing you of all the significant announcements and consultations for that month. This update covers important updates from 6 June through to the 6 July.



Photo by Breno Machado on Unsplash

By Dr Drew Donnelly, Regulatory Specialist, Compliance Quarter

We begin with changes at that apply across the National Electricity Market, including rule changes, then look at announcements on a state-by-state basis.

1. National Energy Guarantee: Draft Detailed Design

Of course, the most significant energy sector announcement was the commencement of the consultation on the National Energy Guarantee (NEG) Draft Detailed Design.[1] Submissions on the draft design consultation itself are due 13 July 2018 and the accompanying Regulatory Impact Statement are due 20 July 2018.

2. AEMC Rule Changes

The Australian Energy Market Commission (AEMC) announced the commencement of several new rules, consultation on draft rules and rule change requests, including:[2]

  • The introduction of contestability for the design, construction and ownership of assets used for connection to the transmission network. It is hoped that a competitive market will help reduce transmission costs;
  • A new requirement that the Australian Energy Regulator (AER) establish ‘values of customer reliability’ estimates every five years. This will ensure that, for the first time, the views of customers influence generation and network investment decisions;
  • A prohibition on discounts that are not really discounts;[3]
  • A draft rule requiring retailers to provide customers with advance notice of price changes. Submissions close 16 August 2018;
  • A draft rule creating a national register of small scale batteries and other distributed resources. Submissions close 7 August 2018;
  • Reinstatement of a power of the Australian Energy Market Operator (AEMO) to procure generation and demand response capacity nine months ahead of a projected shortfall under the reliability and emergency reserve trader (RERT) framework;
  • A rule change request from AEMO to make the RERT framework more efficient. Submissions due 26 July 2018;

June also saw the release of AEMC’s 2018 National Retail Energy Competition review which suggests higher prices combined with complex and confusing energy offers have driven consumer confidence to new lows.[4]

3. AER Releases and Consultations

The AER initiated several consultations and made several announcements over the period[5], including:

  • Consultations on a Restricted Asset Exemption Guideline and draft Service Classification Guideline for electricity distribution businesses, due Monday 20 August 2018 and Monday 13 August respectively. Submissions can be sent to classificationguideline2018@aer.gov.au;
  • Release of an initial report on AER’s Review of the Regulatory Tax Approach.[6] Submissions can be sent to TaxReview2018@aer.gov.au by 26 July 2018;
  • Consultation on New South Wales (NSW) electricity distribution revenues for 2019-24. Submissions on the proposal and issues paper should be received by 8 August 2018 and can be sent to NSW2019-24@aer.gov.au;
  • The release of retailer compliance audits results[7];
  • A consultation on enhancing AER’s retail compliance monitoring tools, submissions due 17 July 2018 at retailcompliance@aer.gov.au;[8]
  • The release of the final Benefit Change Notice Guidelines. Retailers will need to comply by 1 October 2018.
  • The release of a Compliance Reporting Best Practice Manual. It provides guidance to Distribution Network Service Providers (DNSPs) on how to meet compliance reporting obligations under the new Ring-Fencing Guideline;
  • The release of a working paper on use of levelized cost of energy (LCOE) estimates for wholesale electricity monitoring. Submissions can be sent to wholesaleperformance@aer.gov.au(link sends e-mail) and are due by Friday 6 July 2018.

4. AEMO consultations and announcements

In June, AEMO announced[9]:

  • A final determination on tolerance ranges in the wholesale market;
  • New Power System Model Guidelines and System Strength Impact Assessment Guidelines, effective from 1 July 2018;
  • Consultation on a new Intervention Pricing Methodology and Estimated Price Methodology with submissions on both due 6 August 2018;
  • Consultation on proposed amendments to the ‘Procedures for the Exercise of RERT’ submissions closed on 9 July 2018, in light of the new rule change made by AEMC (see above).

5. Department of the Environment and Energy

On 1 July, the Commonwealth Department of the Environment and Energy announced the Carbon Market Institute’s industry led and owned voluntary Code of Conduct for carbon project developers[10].

6. Clean Energy Regulator

Over the past month, the Clean Energy Regulator (CER) announced:

  • The release of May Emissions Reduction Fund (ERF) resources for the media;
  • The installation of a record three million small-scale renewable energy systems;
  • On the 15th of June, the completion of the seventh auction purchasing more carbon abatement through the ERF;
  • The release pf guidance exploring how the Native Title Act 1993 interacts with the ERF, including obtaining legal right and consents from all eligible interest-holders to undertake a project.[11]

7. Clean Energy Finance Corporation (CEFC)

The CEFC announced[12]:

  • WorkSafe Victoria HQ’s new sustainable office design, supported with CEFC Finance;
  • The CEFC’s first smart meter technology financing;
  • New Energy Solar entering into an agreement to acquire the Manildra Solar Farm using a CEFC-financed $50 million acquisition facility;
  • New modelling by CEFC and the Australia Renewable Energy Agency (ARENA) showing that Electric vehicles could represent 90 percent of all cars and light commercial vehicles on Australian roads by 2050;
  • Confirmation of a $90 million cornerstone investment in an innovative finance offering to enable ‘green’ investment opportunities for fixed income investors (e.g. superannuation funds).

8. Australian Renewable Energy Agency (ARENA)

Over the period, ARENA announced[13]:

  • The release of a ‘Future State NEM’ analysis, part-funded by ARENA, showing that Tasmania could become the ‘Battery of the Nation’;
  • Up to $2.5 million in funding to Hydro Tasmania for a final feasibility analysis into the proposed redevelopment of the Tarraleah hydropower scheme;
  • $2 million in funding to MSM Milling Pty Ltd in order to switch its LPG gas fired boilers to a biomass fueled boiler.

9. Victoria

The Victorian Essential Services Commission (ESC) announced[14]:

  • Consultation on new obligations for exempt sellers in embedded networks. It proposes new consumer protections to be introduced to the Energy Retail Code.  Submissions can be emailed to exemptionregister@esc.vic.gov.au by 10 August 2018;
  • The release of its Quarterly Market Update showing, among other things, that energy discounts don’t necessarily lead to lower bills;
  • An update on the new embedded network registration process;

The Energy and Water Ombudsman of Victoria (EWOV) released its affordability report in June providing up-to-date information on affordability in Victoria.[15]

10. New South Wales (NSW)

The NSW Independent Pricing and Regulatory Tribunal (IPART) announced[16]:

  • A survey for electricity customers who have recently asked for a digital meter installation or upgrade, open for customer responses until 3 August 2018;
  • The release of the final benchmark report on Solar Feed-In Tariffs[17]

The Energy and Water Ombudsman NSW (EWON)[18] announced the release of an expanded jurisdiction report[19].

The NSW Parliament Legislative Council Regulation Committee released a report on the impact and implementation of the Environmental Planning and Assessment Amendment (Snowy 2.0 and Transmission Project) Order 2018 concerning the treatment of the Snowy River project as critical state infrastructure.[20]

11. Tasmania

The Tasmanian Economic Regulator announced new Standing Offer electricity prices and a feed-in tariff to apply from 1 July 2018.[21]

12. Queensland

Over the period, the Queensland Department of Natural Resources, Mines and Energy announced[22]:

  • The release of the state budget with measures designed to drive down energy prices through a $2 billion affordable energy plan.
  • The State Government’s announcement for interest-free loans for Queensland families to install solar systems and slash power costs.

If you think that we could be of any support in getting up-to-date with these changes, or engaging in an ongoing consultation process, please get in touch.

[1] See https://www.compliancequarter.com.au/the-details-of-the-detailed-design-national-energy-guarantee-and-qualifying-contracts/ for more information.

[2] Go to https://www.aemc.gov.au/.

[3] Read more at https://www.compliancequarter.com.au/the-end-of-retailers-discounting-the-truth/.

[4] For more, see https://www.compliancequarter.com.au/three-innovation-opportunities-presented-by-the-aemc-2018-retail-energy-competition-review/

[5] For more information see https://www.aer.gov.au/news.

[6] See https://www.compliancequarter.com.au/are-electricity-prices-in-australia-being-driven-by-an-excessive-tax-allowance/ for more information.

[7] For more information see https://www.compliancequarter.com.au/are-you-compliant-with-the-disconnection-rules/.

[8] See https://www.compliancequarter.com.au/review-of-compliance-procedures-and-guidelines/ for more information.

[9] See http://www.aemo.com.au/Media-Centre.

[10] See http://www.environment.gov.au/energy.

[11] For more information go to http://www.cleanenergyregulator.gov.au/.

[12] See https://www.cefc.com.au/media/media-releases/.

[13] See https://arena.gov.au/news/.

[14] See https://www.esc.vic.gov.au/.

[15] See https://www.ewov.com.au/reports/affordability-report/201806-0.

[16] See https://www.ipart.nsw.gov.au/Home/Media-Centre.

[17] See https://www.compliancequarter.com.au/new-benchmark-for-solar-feed-in-tariffs-in-nsw/ for more information.

[18] See https://www.ewon.com.au/.

[19] For more see https://www.compliancequarter.com.au/ewon-expanded-jurisdiction-and-new-fee-structure/.

[20] For more see https://www.parliament.nsw.gov.au/lcdocs/inquiries/2486/Final%20Report%20-%2029%20June%202018.pdf .

[21] See http://www.economicregulator.tas.gov.au/.

[22] See https://www.dnrme.qld.gov.au/home/news-publications/news-listings.

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