The Australian Energy Market Commission (AEMC) is proposing changes to ‘ring-fencing’ arrangements for networks that could contribute to a more timely and efficient connection of new solar, wind and battery projects critical to achieving net zero.

In a draft rule published by the AEMC today, the Australian Energy Regulator (AER) would be empowered to develop ring-fencing obligations for transmission network service providers (TNSPs) when contracting for specific connection services.  

Ring-fencing typically refers to the separation of the regulated and competitive business activities of an electricity network service provider with examples including separation of staff and accounting across business activities.  

AEMC Chair Anna Collyer said as more renewable developments and storage projects come online, a greater focus is being placed on how generators link into networks.

“Ring-fencing is already in place for most monopoly transmission services, but there is a gap in the framework when it comes to ‘negotiated’ and ‘competitive’ connection services – two services for connecting to the network,” Ms Collyer said.

“Today’s draft rule aims to address the risk that a TNSP may discriminate in favour of itself or an affiliate when providing connection services, based on the advantages they may have as a provider with exclusive rights for negotiated connection services.

“Our draft rule suggests a change to the existing framework to provide the AER with the tools needed to address any risk that TNSPs engage in discriminatory behaviour in the market that could adversely effect competition.”

Ms Collyer said the draft determination follows the AER’s 2023 Transmission Ring-fencing Guideline review and a rule change request submitted by the AER.

“This draft rule has been informed by feedback and insights gained from the AER’s review and stakeholders will now have another opportunity to provide feedback for consideration," Ms Collyer said.

“Given the increasing number of generators seeking connection to the transmission system, we do anticipate these changes will help to improve the efficiency of the connection process, delivering savings to consumers and helping to meet our decarbonisation targets.”

The AEMC will hold a forum on 11 March 2024 to provide stakeholders with an opportunity to ask questions and provide feedback on the proposed rule change. Written stakeholder submissions are being accepted until 4 April 2024.  

For more information and contact details visit the project page. 

Media: Georgina Kentwell, 0459 918 964, media@aemc.gov.au