Transitional Compliance for Embedded Network Managers (ENM): The Key Facts

The Australian Energy Regulator (AER) has just announced that a transitional compliance approach to the new embedded network manager (ENM) obligations that are coming into force on 1 December (https://www.aer.gov.au/communication/aer-announces-transitional-compliance-approach-embedded-network-manager-appointment).

By Dr Drew Donnelly, Compliance Quarter

Below we set out some key things you need to know.

The ENM role

The ENM is a new role that has been created to support customers in embedded networks transferring from ‘off-market’ to ‘on-market’ and vice versa: That is, embedded network customers switching between electricity supply from an exempt ‘on-seller’ and an authorised retailer.

Key components of the ENM role include (but are not limited to):

• registering a child NMI (National Metering Identifier) to customers in embedded networks, and;
• creating and updating NMI standing data in the Market Settlement and Transfer Solutions (MSATS) system.

In order for embedded network operators to adjust to the new requirement to become or to appoint an ENM, the AER will allow an initial transitional period from 1 December 2017 to 31 March 2018

Through that transitional period, if an embedded network operator can demonstrate they are taking active steps to appoint or become an ENM, the AER will “focus on education and not actively pursue enforcement of compliance issues in respect to the NER [National Electricity Rule] requirement”.

Does this mean implementation of the new rules have been delayed?

No. The new requirement to appoint or become an ENM still comes into force through the National Electricity Amendment (Embedded Networks) Rule 2015 No. 15 on 1 December 2017.

The AER are indicating that they will take a pragmatic approach to enforcement of that new requirement, recognising that some embedded networks will not have ENMs as required to do so by 1 December 2017.

Note, however, that from 1 December 2017, the AER will need to see evidence that all relevant embedded network operators have attempted to secure or become an ENM and have been unsuccessful or, are currently engaged in the process of securing an ENM (see the Notice of Transitional Arrangements, p2[1]).

What should you tell embedded network customers?

From 1 December 2017, only an ENM can register NMIs in embedded networks and create and update standing data for customers in embedded networks in the MSATS system.

In light of this, if an ENM has not been appointed, you will need to inform customers of the delay and give them an indication of when you intend to be in compliance with the requirement.

What about the other changes being introduced on 1 December?

The ‘Power of Choice’ reforms required a suite of changes to the National Electricity Rules and National Energy Retail Rules, which all come fully into effect on 1 December 2017. Other rule changes include:

• the Expanding Competition in Metering & Related Services Rule Change.

This rule change will open up competition in metering (introducing the new role of the ‘metering coordinator’), and support a market-led deployment of advanced meters (http://www.aemc.gov.au/getattachment/4c772b03-b0dd-44c1-b6ed-bd6d46601f41/Final-Rule-%E2%80%93-NER.aspx).

• the Meter Replacement Processes Rule Change

This rule change clarifies the rights and obligations of parties at a connection point in respect of replacing a meter during the retail transfer process (http://www.aemc.gov.au/getattachment/e9a3316b-0ae9-4ecd-b5da-a35f09f3bf18/Final-Rule.aspx).

• the Updating the Electricity B2B Framework Rule Change

This rule change updates the electricity ‘business-to-business’ (B2B) framework which provides for a standard form of communications between businesses for certain services related to small customer meters (see http://www.aemc.gov.au/getattachment/422d3612-d3f0-4cc9-8421-204455a6f350/Final-rule.aspx).

Full compliance with these rule changes will be expected from 1 December 2017.

If you think we could be of any assistance in supporting your process to appoint or become an ENM, please get in contact with us.

[1] https://www.aer.gov.au/system/files/Notification%20of%20transitional%20arrangements%20-%20National%20Electricity%20Rules%20-%20Compliance%20with%20the%20requirement%20to%20appoint%20an%20ENM_1.pdf.