AGL recently responded to the AER’s draft updated ring-fencing Guideline. The proposed changes contemplate investment in energy storage, stand-alone power systems as well as general updates to make the Guideline clearer and less administratively complex.

We believe the Ring-fencing Guideline should be designed to complement the broader economic regulatory framework governing distribution network planning and investment to support the development of a competitive market for DER services, including network services.

Whilst we support the AER’s proposed prohibition on distribution networks from providing contestable services with a battery, we consider that further safeguards should be established in the Ring-fencing Guideline to:

• Facilitate the procurement of network services from market as a first order priority; and
• Prevent misuse of the proposed waiver process that could otherwise lead to economically inefficient outcomes.

On the deployment of stand-alone power systems (SAPS), AGL agrees with the AER’s proposed approach to establishing an exemptions framework to allow distribution networks to provide generation services to network-led SAPS within a generation revenue cap. We consider there is also a need to establish appropriate safeguards to ensure the exemptions framework is not misused to facilitate inefficient network investments and/or favour investment proposals from affiliated ring-fenced entities.

We also support the AER’s proposed incremental improvements to certain obligations to make the Ringfencing Guideline clearer and less administratively complex.

We elaborate our key recommendations in our submission, a copy of which is available here.