The Australian Energy Regulator (AER) has commenced a review of transmission ring-fencing arrangements and is seeking stakeholder input to update the current transmission ring-fencing guidelines.
The AER’s transmission ring-fencing guidelines enable the participation of transmission businesses in contestable electricity markets while at the same time supporting the long-term interests of consumers.
For example, transmission businesses provide connection services to electricity generators and some large customers, and some of their affiliates own or have interests in electricity generation assets.
The current transmission ring-fencing guidelines were first developed in 2002 and have not been substantially reviewed since then.
The discussion paper released seeks stakeholder views in regard to any harm that could arise from an electricity transmission business, or one of its affiliates, operating in contestable electricity markets.
The discussion paper also considers changes in markets for contestable electricity services since the initial development of the guidelines, and the AER’s recently developed national approach to ring-fencing of distribution networks.
Submissions to the discussion paper are due by 31 January 2020.
Ring-fencing supports competition in markets for electricity services and efficiency of regulated network services provided to consumers on a monopoly basis. It does this by requiring a network service provider to separate parts of its business that provide regulated services from the parts of its business that provide unregulated services.