jemena-logo-v22 August 2011

RE: Discussion Paper – Victorian specific regulatory requirements under the National Energy Customer Framework

Dear Raif

Jemena Electricity Networks (JEN) appreciates the opportunity to comment on the Department of Primary Industries (DPI) discussion paper relating to the Victorian specific regulatory requirements under the National Energy Customer Framework (NECF).

In preparation for the implementation of NECF on the target date of 1 July 2012, the DPI has undertaken a review of the existing Victorian regulatory framework against the proposed national frameworks. This was done with the intent of determining which of the Victorian specific regulations should be retained so that customers are not disadvantaged by the change.

In section 4 of the discussion paper, the DPI has set out the Victorian regulatory rules that it proposes to retain. JEN has examined these regulatory rules and this submission is confined to those rules that impact an electricity distributor.

In summary, our key messages are that JEN:

  • supports the DPI's proposal to substantially preserve the Electricity Industry Act 2000 including those parts identified in the discussion paper for repeal
  • agrees that there is a need to retain clause 3.1 of the Electricity Customer Transfer Code because of the on-going Victorian jurisdictional role
  • supports revoking the majority of the obligations in the Electricity Customer Metering Code except for clauses 7.1 which required is linked to smart meters
  • questions why there is a need to retain clauses 7.1 of the Electricity Customer Metering Code on confidential information given the National Electricity Rules (NER) clause 7.10 generally deals with confidential information
  • submits that clause 6.1(aa) of the Electricity Customer Metering Code be retained (until it is adequately dealt with in a national framework) as it deals with non-reversion of smart meters to accumulation meters
  • supports the retention of all the Electricity Distribution Code clauses indentified in the discussion paper but does not support the retention of clause 9.1.3A
  • supports the retention of the Public Lighting Code
  • supports DPI's proposal to retain section 2 of Guideline No.14 and submits retention of sections 3, 5 and 6 until the end of the current regulatory period
  • supports the DPI's proposal not to retain Guidelines No. 3, 11, 15 and 17.

JEN's detailed response to the DPI's issues paper is set out in Attachment 1.

If you wish to discuss the submission, please contact me on (03) 9854 9442 or by email siva.moorthy@jemena.com.au.

Yours sincerely

Siva Moorthy

Manager Network Regulation

Attachment 1: Jemena Electricity Networks' Response to DPI consultation — Victorian specific regulatory requirements under the National Energy Customer Framework

Electricity Industry Act 2000

The DPI proposes to repeal most of Part 2 of the EIA – Regulation of Electricity Industry as it is redundant in light of the NECF. Exceptions include:

  • Division 2 – Price regulation. This provides for a 'reserve' retail pricing power should a review of the Victorian retail market show that competition is not effective.
  • Division 2A – Special pricing regime for the development of clean energy. This regime provides for cost recovery for specified clean energy projects. This may be retained as a State development prerogative.
  • Divisions 3 & 4 – Licences. These provisions will cease to apply to retailers, while the feasibility of removing this Division entirely has been discussed in DPI's previous discussion paper.
  • Division 5A – the "Feed-in Tariff" regimes. This is an important state government policy area, and this division will be retained.
  • Division 6A – Advanced metering infrastructure. This division is critical to support the advanced metering roll-out, and will be preserved. JEN supports DPI's proposal in relation to Part 2 of the EIA. With respect to Division 5A, section 40FH11 refers to use of system agreement (UoSA). JEN suggests section 40FH be appropriately amended, given the requirement to amend the UoSA will become redundant when it is replaced by the National Electricity (Retail Support) Amendment Rule 2011. JEN supports the repeal of Part 3 of the EIA.  JEN notes that the following Parts of the EIA will be preserved substantially unamended:
  • Part 4 – Protection of critical electricity infrastructure.
  • Part 5 – Powers of electricity corporations.
  • Part 6 – Electricity supply emergency provisions.
  • Parts 1 & 7 – Preliminary and General.

Victorian NMI standing data requirements (clause 3.1 of the Transfer code)

NER Clause 3.13.12(f) requires each Registered Participant who is a Jurisdictional NMI Standing Data supplier to provide the NMI Standing Data to AEMO that is accordance with the relevant Jurisdictional NMI Standing Data schedule.

NER defines Jurisdictional NMI Standing Data schedule as the schedules described in NER clause 3.13.12(a), as amended from time to time in accordance with clause 3.13.12(b). The Victorian NMI Standing Data schedule is defined in the Transfer Code and it needs to be retained.

JEN agrees that there is a need to retain the on-going jurisdictional role.

Electricity Customer Metering Code – clauses 7.1, 7.2 and 6.1(aa)

Electricity Customer Metering Code clause 7.1 deals with the requirement on retailers and distributors to provide historical billing and metering data within 10 business days to customers with smart meters. Smart meter obligations are Victorian specific and therefore needs to be retained until there is a national framework for smart meters.

Electricity Customer Metering Code clause 7.2 requires retailers and distributors to maintain confidentiality of the data in accordance with the relevant laws.

JEN notes that there is a confidentiality clause in the NER. Clause 7.10 of the NER states:

"Energy data, metering data, NMI Standing Data, information in the metering register and passwords are confidential and are to be treated as confidential information in accordance with the Rules."

Since there is already the NER clause, JEN questions why there is a need to have Victoria specific rules on confidential information.

Electricity Customer Metering Code clause 6.1(aa) deals with non-reversion of smart meters to accumulation meters. This clause is subject to the minimum standard of metering equipment, being smart meter, following the initial installation of smart meter at a customer's premises.

Electricity Distribution Code

The discussion paper notes that there are a small number of obligations on the distributors regarding smart meters which are to be retained, as well as long-standing technical requirements to ensure the reliability and supply of electricity to Victorian customers. They are:

  • Timeframes for connecting customers – clauses 2.2, 2.4 and 2.5
  • Timeframes for disconnecting customers – clause 12.6.1
  • Timeframes for reconnecting customers – clause 13.1.2
  • Notification by distributors prior to disconnecting customers for distributionrelated reasons (other than in an emergency) – clause 11.2 and 12.1
  • Written communications to owners of small embedded generators – clause 9.1.3A
  • Obligation to display a 24-hour telephone number on the meter – clause 9.1.13.1
  • Timeframe for remote disconnections – clauses 12.3 and 12.4
  • Timeframe for remote reconnections – clause 13.1.2
  • Written advice to customers of potential tariff changes following installation of the smart meter – clause 9.1.14
  • Melbourne CBD – Security of supply – clause 3.1A
  • Quality of Supply – clauses 4.2 to 4.8
  • Support for customers on life support during widespread outages – clause 5.7
  • Co-ordinated efforts during widespread power outages– clause 8.2
  • Notification to customers – clause 9.1.2A
  • Guaranteed Service Levels – clause 6

JEN supports the retention of the above mentioned clauses except for electricity distribution code clause 9.1.3A.

Clause 9.1.3A of the Electricity Distribution Code (Code) states:

"A distributor must provide written communication with the owners of small embedded generators contained on the distributors respective register required under clause 7.8 on initial connection and entry into the register, and at no more than three-yearly intervals to advise the owners of small embedded generators their obligations under this Code and the circumstances in which the distributor has the right to disconnect unsafe small embedded generators."
[Emphasis added].

In section 4 of the discussion paper, DPI notes that Clause 9.1.3A requires distributors to notify embedded generators of their obligations, including their rights to disconnect unsafe small embedded generators. However, there is no suggestion in the discussion paper that the requirement to maintain a register is going to be retained – not that JEN is suggesting that it should be retained.

JEN believes that the removal of the requirement to provide notice to small embedded generators of their obligations under this Code will not disadvantage them. This is because clauses 11.2 and 12.1 (which the DPI proposes to retain) sufficiently deal with the concerns clause 9.1.3A was designed to address – that is, the right of a distributor to disconnect unsafe small embedded generators.

Under clause 11.2.2, a distributor who becomes aware of a breach of this Code by a customer – an unsafe embedded generator included – is required to notify the customer in writing about the breach. Clause 12.1 provides the distributor the right to disconnect the customer for failing to remedy the non-compliance notified under clause 11.2.2.

Moreover, the Code obligations the DPI proposes to retain (as discussed in section 4) have no specific relevance to a small embedded generator. It is not clear to JEN what the advice to small embedded generator as contemplated under clause 9.1.3A will entail.

A small embedded generator is normally not more than 2kW and is usually connected in parallel to a customer's electrical installation. Should a distributor become aware of an unsafe small embedded generator, there is no practical way for the distributor to disconnect the embedded generator other than to advise the customer as provided under clause 11.2.2. Where a customer with an embedded generator fails to remedy a safety breach, a distributor can exercise its right to disconnect supply under clause 12.1. The important point to note is that a small embedded generator normally forms part of a customer's installation and is not a discrete installation connected to the grid.

JEN contends that clauses 11.2 and 12.1 meet all the intentions of clause 9.1.3A.

Public Lighting Code

JEN supports the retention of the Public Lighting Code

Guideline No.3

JEN agrees with DPI's assessment that the guideline will not longer be required when it is replaced with the AER's regulatory information notices (RIN) under the NER. Guideline No.11 JEN agrees with DPI's view that there are differences between guideline 11 and the small compensation claim regime set out in Part 7 of the NERL. But we believe the differences are not material to warrant the retention of any aspects of the guideline.

Electricity Industry Guideline No.14

This guideline facilitates the following aspects of electricity distribution:

  • Undergrounding of distribution fixed assets – section 2
  • Determination of customer contributions to the capital cost of new works and augmentation – section 3
  • Contestability of connection and augmentation works – section 4
  • Provision of excluded services – section 5
  • Present value calculations – section 6

Section 2 of the Electricity Industry Guideline No.14 sets the requirements on distributors to co-operate in assessing proposals and determining costs for undergrounding distribution fixed assets. JEN supports the retention of this section until such time it can be addressed in the national rules.

In the recent electricity distribution regulatory proposal, distributors applied section 3 of this guideline to estimate the customer initiated capital expenditure requirement. The Victorian electricity distribution determination 2011 – 2015 made by the AER accepted the distributors' proposal on that basis. JEN submits that section 3 must remain until the end of the current regulatory period.

Sections 2 and 3 depend on section 6, which sets the discount rate the distributors must use in calculating the present value of future costs and revenues.

Section 5 sets the framework for approval of excluded service charges. The process for setting charges for remote AMI services is set out in the AMI Order in Council, and requires an assessment of proposed charges under the Electricity Industry Guideline No.14. For example, in February 2001, the AER made its final decision on AMI remote service charges. These charges will not apply after 31 December 2012. Each distributor is expected to submit a revised AMI remote service charges proposal for the AER's consideration. These proposals would have to be submitted in accordance with the process set out in section 5 of the guideline.

Guideline No.15

JEN agrees with the DPI's analysis that the new Chapter 5A adequately meets the objective and purpose of Guideline No.15. JEN supports the DPI's proposal not to retain Guidelines No.15.

Guideline No. 17

JEN supports DPI's proposal not to retain Guideline No.17.

Footnotes

1 40FH Distribution company licences to require credits for qualifying solar energy generation
electricity

(1) This section applies to a distribution company—

(a) whose licence to distribute electricity includes a condition of the kind provided for under section

21(d) (a use of system agreement condition); and

(b) that, in accordance with the use of system agreement condition, has entered into an
agreement of the kind contemplated by section 21(d) with a relevant licensee or small retail
licensee (a use of system agreement).