Power of choice – embedded networks information session 20 October 2016

AGENDA Introduction Background Consultation Matter Purpose Background What is Power of Choice? Embedded Networks final rule change AER network service provider registration exemption guideline AER exempt selling guideline Consultation Matter Service Level Procedure for Embedded Network Managers Key features and obligations Consultation Process Key dates and milestones How to make a submission? Close

1. Introduction

1. introduction Purpose of the meeting: Inform Embedded Network Operators and potential Embedded Network Managers of the new regulatory framework related to embedded networks. Provide an overview of the AEMO consultation process for the new Service Level Procedure for Embedded Network Managers. More broadly, to identify potential Embedded Network Managers and engage other interested parties.

2. Background – What is power of choice? Power of Choice (POC) is a package of reforms to the National Electricity Market (NEM) initiated by the Australian Energy Market Commission (AEMC) so that consumers can have greater flexibility over the way they use electricity and manage expenditure. The AEMC’s POC review has resulted in multiple rule changes to the National Electricity Rules (NER) and the National Electricity Retail Rules (NERR). The following final rule changes have been published by the AEMC: Expanding competition in metering and related services Embedded Networks Meter Replacement Processes AEMO is currently consulting on procedure changes that are required by these POC rule changes.

2. Background – embedded Networks rule change On 17 December 2015, the AEMC made a final rule change to reduce the barriers to embedded network customers accessing retail market offers - click here for a link to AEMC’s final rule determination. The final rule commences on 1 December 2017 and creates a new accredited provider role – Embedded Network Manager (ENM) – to perform the market interface functions that link embedded network customers to NEM systems. The final rule triggers changes to AEMO procedures and the Australian Energy Regulator's (AER) network service provider registration exemption guideline.

2. Background – embedded Networks rule change Together, these amendments: set out the detailed functions, responsibilities, and governance arrangements for ENM’s; and specify which Embedded Network Operators are required to appoint an ENM.

2. background – aer exemption guideline The AER Network Service Provider Registration Exemption Guideline can be found at: https://www.aer.gov.au/networks-pipelines/guidelines-schemes-models- reviews/network-service-provider-registration-exemption-guideline-august- 2013 The Embedded Networks rule change requires the AER to update this guideline by 1 December 2016. The AER is currently reviewing the guideline, details of the review and a draft version of the new guideline can be found at: https://www.aer.gov.au/networks-pipelines/guidelines-schemes-models- reviews/review-of-network-service-provider-registration-exemption-guideline- 2016 Changes to the AER guideline will specify which embedded network operators, owners, or controllers are required to appoint an ENM. The AER Exempt Selling Guideline can be found at: http://www.aer.gov.au/retail-markets/retail-guidelines/retail-exempt-selling-guideline-march-2016

3. Consultation Matter – Service Level Procedure for ENM’s The final rule change requires AEMO to develop and publish the following by 1 March 2017: Service Level Procedure for ENM’s Guide to Embedded Networks referred to in clause 7.16.6B of the Embedded Network rule change AEMO is currently conducting stakeholder consultation on the Service Level Procedure for ENM’s, details can be found at: http://www.aemo.com.au/Stakeholder-Consultation/Consultations/Power-of-Choice---AEMO-Procedure-Changes-Package-2 The AEMO Guide to Embedded Networks is not subject to NER consultation, however AEMO will be seeking stakeholder input before its publication on 1 March 2017.

3. Consultation Matter – Service Level Procedure for ENM’s The Service Level Procedure for ENM’s is made in accordance with clause 7.16.6A of the embedded networks rule change. Key obligation: The ENM must act in the role of Local Network Service Provider (LNSP) in MSATS for its child connection points and perform the following functions: Create Child NMIs Maintain NMI Standing Data for Child NMIs Make a NMI a Child NMI

3. Consultation matter – Service Level Procedure for ENM’s Key features: ENM obligations including the provision of ENM services The use of ENM sub-contractors, and the insurance requirements Systems and interface requirements (i.e. MSATS, B2B e-Hub) Audits undertaken by AEMO to review ENM services, systems, and data Review of ENM accreditation by AEMO which may lead to ENM applying for re-accreditation Dispute resolution process Embedded Network Information which the ENM must maintain (i.e. EN wiring information) Delivery of information upon deregistration, the ENM must deliver information to AEMO or AEMO’s nominee if the ENM is to be deregistered

3. Consultation matter – Service Level Procedure for ENM’s Key features: CONT’D Market interface functions performed by the ENM: NMI Allocation – the process the ENM must follow to allocate NMIs to embedded network child connection points Distribution Loss Factor allocation – the ENM must assign DLF code and TNI code to the embedded network child connection points MSATS setup: Market exit: when a child connection point is no longer settled in the market Resumption as child connection point, when a child connection point returns to being settled in the market Physical rewiring to join an embedded network, when a NMI moves from a distribution network to an embedded network Network Tariff Code update for Child NMIs.

3. Consultation matter – Service Level Procedure for ENM’s MSATS Procedures have already been updated AEMO to incorporate changes resulting from the embedded networks rule change Final versions of the MSATS Procedures were published by AEMO on 31 August 2016 (effective from 1 December 2017) and can be found at: http://www.aemo.com.au/Stakeholder-Consultation/Consultations/~/~/link.aspx?_id=2E5296DDD67A43AD8F8CA93AC7851851&_z=z

4. Consultation process – key dates and milestones Consultation timeline Date Milestone 10 October 2016 AEMO publishes Notice of First Stage Consultation 15 November 2016 Submissions close for First Stage of Consultation 13 December 2016 AEMO publishes Notice of Second Stage Consultation (Draft Determination) 16 January 2017 Submissions close for Second Stage of Consultation 28 February 2017 AEMO publishes Final Determination 25 business days 20 business days The consultation will be conducted in accordance with the consultation procedure under clause 8.9 of the NER.

4. Consultation process – how to make a submission? All consultation materials are contained on the AEMO website at: http://www.aemo.com.au/Stakeholder-Consultation/Industry-forums-and-working-groups/Retail-meetings/~/link.aspx?_id=55DE02235FD34FD6BE882F7F570CB56B&_z=z AEMO has developed a participant response template to assist stakeholders in providing submissions. All first stage submissions must be emailed to AEMO in word and pdf format by 5pm ADST on Tuesday 15 November 2016. Please email any questions to AEMO at poc@aemo.com.au

6. questions