The AEMC today published a draft report for our review of the regulatory frameworks for stand-alone power systems. 

The report sets out the Commission’s emerging thinking and draft recommendations to enable distribution businesses to provide stand-alone power systems to their existing customers where it is economically efficient, for example in remote locations, while maintaining appropriate consumer protections and service standards.

In particular, the draft report explains the Commission’s initial views on mechanisms for transitioning customers to off-grid supply, the regulatory and commercial arrangements that would then apply on an ongoing basis, and how appropriate consumer protections would be preserved. 

To support efficient and transparent decisions by distribution businesses when moving consumers off-grid, the AEMC proposes:

• a new requirement for distribution businesses to evaluate proposed stand-alone systems against a set of criteria, which includes testing the market for alternative off-grid solutions 
• an obligation on distribution businesses to consult with customers and any other relevant parties as part of the planning process.

The AEMC also recommends changes to the National Electricity Law and Rules to remove existing barriers to distribution businesses providing stand-alone power systems as a regulated service. This would enable the Australian Energy Regulator to regulate stand-alone power systems using current frameworks. 

The report includes two illustrative service delivery models for providing ongoing supply to off-grid customers after they have transitioned away from the grid. Stakeholders are encouraged to provide input on these different approaches, as both have advantages and disadvantages.

The report also considers how customers can continue to have access to competitive prices, consumer protections and reliability standards, so they are not disadvantaged by moving to a stand-alone power system.

As stand-alone power systems are currently subject to jurisdictional - rather than national - legislative frameworks, the AEMC has outlined a potential process where changes made to the national frameworks would not be applied in a jurisdiction until the Minister in that jurisdiction gives their approval.

Submissions on the draft report are due by 5 February 2019.

This review is part of the AEMC’s consumer action plan to give consumers more choices about energy products and services; more control over energy bills; and stronger protections.

Media: Prudence Anderson, Communication Director, (02) 8296 7817; 0404 821 935

Background

A stand-alone power system is an electricity supply arrangement that is not physically connected to the national grid. The term encompasses both microgrids, which supply electricity to multiple customers, and individual power systems, which relate only to single customers.

In general, stand-alone power systems are currently not captured under the national electricity frameworks.  They are instead subject to jurisdictional legislative frameworks that vary in their comprehensiveness.  

Under the terms of reference for the review provided by the COAG Energy Council, the Commission will consider two priority areas:

• Priority 1 will mainly focus on the development of a national framework for customers that move from grid-connected supply to stand alone power systems provided by existing distribution network service providers
• Priority 2 will consider a national framework for the provision of standalone power systems by parties other than distribution network service providers.

Given the breadth of issues across the review as a whole, a separate consultation process will be undertaken for the further issues associated with priority 2, beginning in early 2019.

Under the terms of reference for the review, the Commission is required to provide the COAG Energy Council with a final report for priority 1 by 31 May 2019.  A final report for priority 2 is then due by 31 October 2019.

We are concurrently working on updates to the regulatory framework for embedded networks, with a draft report due in January 2019. The two workstreams will consider a number of related issues, particularly with regards to consumer protections.