Aus – ring-fencing batteries

Introduction

Pipes & Wires #205 examined the AER’s work stream on ring-fencing batteries. This article examines the AER’s Draft Guideline v3 that was released in May 2021.

?Recapping the AER’s objectives for ring-fencing

?The AER has published various guidelines on ring-fencing assets, which have the following objectives…

?·????Require accounting and functional separation of Direct Control Services (a subset of Standard Control Services) from the provision of other services.

?·????Promote competition in the delivery of electricity services.

?·????Limit the ability of electric distribution companies to cross-subsidise other services from its Distribution Services.

?·????Prevent electric distribution companies conferring a competitive advantage on related entities.?

?Key features of the v3 Draft

?The AER’s draft positions include…

?·????Allowing distributors to provide generation services under an exemption framework that will include inter alia a generation revenue cap.

?·????Distributors will be prima facie prohibited from using batteries to provide contestable services to either themselves or to other parties, but can apply for a waiver to supply excess battery capacity to a third party where the distributor believes that the benefits outweigh the detriment.

?·????Restrictions on a distributor sharing its staff with an affiliate that provides contestable services to ensure that the affiliate is not provided with an unfair advantage.

?As usual, Pipes & Wires has paraphrased the Draft, so affected parties should examine the AER’s full publication.

?Next steps

?The AER expects to publish its Final Guideline and explanatory statement around September or October 2021.