Modernising Electricity Regulation: The AES Framework and Embedded Networks in Western Australia

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Background

The existing licensing framework overseeing the sale and supply of electricity in Western Australia (WA) has struggled to adapt to the rapid expansion of emerging and atypical electricity business models in recent years. To address this, in 2019, the then Minister for Energy commissioned Energy Policy WA to assess the regulatory framework in Western Australia.

In 2020, Energy Policy WA initiated consultations on a proposed regulatory framework for various categories of ‘alternative electricity services’ called the Alternative Electricity Services (AES) registration framework. This framework aims to apply customer protection obligations to persons providing electricity services through atypical business models not covered by the existing licensing framework, or where the current framework is deemed inadequate. Legislative amendments to the Electricity Industry Act 2004 (WA) to give effect to the AES registration framework were presented to Parliament on August 15, 2023, through the Electricity Industry Amendment (Alternative Electricity Services) Bill 2023 (WA).

The AES registration framework will operate alongside the existing electricity licensing and exemption frameworks and will require providers of a prescribed service to:

  • register with the Economic Regulation Authority (ERA);
  • become a member of the Electricity Ombudsman Scheme; and
  • adhere to obligations outlined in the AES Code.

This registration framework will deliver enforceable protections for electricity customers of those AES providers and the ERA will be responsible for monitoring compliance with, and enforcement of, the registration framework, as well as maintaining the register of AES providers.

Currently, two services are being considered for regulation under the framework including embedded network services.

Voluntary Embedded Networks Code of Practice (the Code)

With embedded networks potentially being captured by the AES registration framework, Energy Policy WA is rolling out a non-binding voluntary code of practice. Embedded Network Sellers (ENS) can opt to participate, allowing them to gain practical experience (“learn by doing”) before potential mandatory adherence to the AES Code.   The objective of the Code is to define standards of conduct in the supply of electricity and related services to customers by an embedded network seller.

During the initial voluntary period of 6 months between 22 February and 30 September 2024 (with possible extension), learnings from this Code will help inform the development of a mandatory code of practice for alternative electricity services. These may apply to embedded network sellers and other emerging business models that fall outside the licensing framework.  The AES framework is expected to be implemented in late 2024 or early 2025.

For more information on the Voluntary Embedded Networks Code of Practice click here.

Consultation Regulatory Impact Statement (CRIS) – Regulating the Sale and Supply of Electricity in Embedded Networks

In order to obtain feedback on the best way to give standard electricity rights to customers, Energy Policy WA has released a consultation paper titled ‘Regulating the Sale and Supply of Electricity in Embedded Networks’

In this paper, Energy Policy WA is seeking feedback as to whether the sale and distribution of electricity within embedded networks should fall under the AES registration framework. The paper outlines four potential approaches:

  • Maintaining the current class-based licence exemption
  • Individual licence exemptions
  • Retail and potentially distribution licences
  • AES registration

The primary goal is to identify the most effective method for extending comparable protections to customers of embedded network sellers as those enjoyed by customers of licensed electricity retailers. The consultation period closes on 19 April 2024.  If you or your team have any questions regarding these changes or the AES framework please feel free to contact us.

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