The Australian Energy Regulator’s (AER) Quarterly Compliance Report: National Electricity and Gas Laws 1 January – 31 March 2018 was recently released.[1] It canvasses a range of compliance activities carried out by the AER over that three-month period, including compliance for wholesale market participants such as retailers, distributors and generators.  Rather than market participants, our focus today is on the AER’s compliance activities with respect to businesses operating under network or retail exemptions. In particular, we look at compliance lessons for Embedded Network Operators (ENOs) and exempt businesses using power purchase agreements (PPAs).

exempt businesses

By Dr Drew Donnelly, Regulatory Specialist, Compliance Quarter.
  1. Advising embedded network customers that seek to go ‘on market’

The AER observes that embedded networks are now expected to be fully in compliance with the power of choice reforms requiring the appointment of Embedded Network Managers (ENMs) in certain states and territories. AER comments that where ENMs are required to be appointed and have not been, the AER will consider taking steps to revoke an ENO’s network exemption.[2]

Problematically, AER has identified a phenomenon of market retailers being unwilling to provide offers to embedded network customers who do not have a Network Metering Identifier (NMI).[3] This is primarily a compliance issue for retailers; it is the responsibility of the market retailer to request the ENM to create a child NMI. However, this also instructive for ENOs. An embedded network customer may, based on retailer refusal, approach the ENO seeking an NMI. In that case, an ENO should contact the retailer advising them of the appropriate procedure (and, if an ENM does not currently exist, begin the process for appointing or becoming one).

  1. Ensuring that MSATS data is correct for child connection points

The Australian Energy Market Operator (AEMO) has identified discrepancies between wholesale metering data at transmission nodes and the sum of metering data for downstream connection points.[4] This suggests that participants are either incorrectly entering NMI data relating to regional electricity loss (captured in ‘Transmission Node Identities’ or ‘TNIs’) or it has not been updated where necessary. AER identified Local Network Service Providers (LNSPs) as the culprits. So, what does this have to do with ENOs?

For those ENOs who have also been appointed as ENMs, it is their responsibility to ensure that the data relating to ‘on-market’ child connection points is accurate and up-to-date. I.e. they act as the LNSP for those child connection points. This includes responsibility for TNIs which capture regional electricity loss. All ENMs must have a procedure in place for ensuring that they have accurate and up-to-date TNIs for connection points in their embedded networks. Up-to-date TNIs can be requested from AEMO.

  1. Metering obligations of Solar Energy Businesses

An increasingly popular renewable energy arrangement is the solar Power Purchase Agreement (solar PPA). This involves a third party installing solar photovoltaic (PV) panels on a customer’s premises from which that customer is sold the energy produced. Vendors of solar PV are eligible for both retail authorisation and network exemptions.

The AER observed that some solar PV businesses are unsure of their metering obligations.[5] AER confirmed that solar PV with PPAs  (and holding a valid exemption) are not subject to the metering rules in the National Electricity Rules and associated Metrology Procedure. Rather, through their network exemptions they are simply subject to the condition that meters comply with the requirements of the National Measurement Act. Further information, including pattern approval requirements and pattern approval application forms, are available on the National Measurement Institute’s website.

 

[1] See https://www.aer.gov.au/wholesale-markets/compliance-reporting/quarterly-compliance-report-january-march-2018.

[2] See compliance report, p15.

[3] See compliance report, p16.

[4] See compliance report, p10.

[5] See compliance report, p17.

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