Retailers achieve big win in battle for behind-the-meter market

Australia’s electricity retailers have won a major victory in the battle over access to the nation’s lucrative solar and battery storage market, after the Australian Energy Regulator effectively ruled networks out of the game.

The AER’s new guideline – effective Thursday, but to be fully implemented by network distribution businesses by January 01, 2018 – 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.

Any unregulated services, the Guideline says, will need to be provided through a completely separate entity that offers its services in a competitive market.

The aim of the rule, says the AER, is to prevent network businesses from shifting costs into their regulated business or taking unfair advantage of their regulated position in the electricity market. It is also designed to encourage the development of competition in new products and services that the AER argues will give consumers better electricity choices.

Networks, however, are bound to disagree, just as they did back in August when the regulation was flagged in the AER’s Draft Guildeline. They, and others in the industry, argue that keeping the networks out of the market will unnecessarily nobble the transition the energy market has to make.

“We just think that is a ludicrous position to be in,” said Rick Francis – the CEO Spark Infrastructure, which owns 49 per cent stakes in South Australian Power Network, the CitiPower and Powercor networks in Victoria, and recently bought a 15 per cent stake in Transgrid, the NSW-based high voltage network provider.

Francis was particularly angry about proposals that networks would have to duplicate all their services in a new company, right down to depots, and argued the rules would not be good for consumers, because they would mean higher costs.

The AER disagrees: “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.

“Electricity markets are becoming more dynamic and decentralised. Consumers are looking for new products and services to meet their energy needs.”

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