The Australian Energy Regulator (AER) has published a Ring-fencing Guideline designed to encourage the development of competition in new products and services to give consumers better electricity choices.
The guideline, effective from December 1, but to be fully implemented by network distribution businesses by January 1 2018, aims to prevent businesses from shifting costs into their regulated business or taking unfair advantage of their regulated position in the electricity market.
The AER’s Guideline requires distribution network service providers (DNSPs) to separate their regulated business activities, costs and revenues from other unregulated services, such as solar PV and battery installations.
Unregulated services would need to be provided through a separate entity that provides services in a competitive market.
“This binding Guideline fosters a competitive market, and will ultimately drive better consumer choices allowing customers to find the electricity offer that best suits their needs,” AER Chair Paula Conboy said.
New technologies such as PV solar installations, smart(er) appliances, battery storage, and electric vehicles are being offered to consumers.
The services these technologies provide will enable households and businesses to better manage how much electricity they use and ultimately help manage electricity bills, including, for example, when to store, sell, and buy electricity.
“Electricity markets are becoming more dynamic and decentralised. Consumers are looking for new products and services to meet their energy needs,” Ms Conboy said.
The extensive consultation process was valuable in ensuring the guideline is well targeted, proportionate, and provides confidence to the competitive markets the guideline is seeking to encourage.