The Australian Energy Regulator (AER) has released the Draft Network Exemptions Guideline (version 7) (Draft Guideline) for consultation.

A key change in the Draft Guideline relates to the introduction of an opt-in primary registrant model.

Currently any person who owns, controls or operates an embedded network must be a registered network service provider or exempt by the AER. The Draft Guideline proposes a new model that allows for the nomination of a primary registrant.

The Draft Guideline specifies which conditions the primary registrant must perform on behalf of the other parties. Currently the AER intends that this only extend to the requirement to be a member of an ombudsman scheme.

For information on the current status of ombudsman membership please see our earlier alert.

Despite the nomination of a primary registrant, any other person who owns, controls or operates an embedded network must still register. If there is non-compliance with any condition, all parties are responsible for the failure and will be in breach of the relevant conditions of their exemption.

Many stakeholders would consider that the approach adopted by the AER does not deliver. Specifically it does not restrict responsibility for compliance with network conditions to one entity. The network owner is still required to register and is liable for non-performance despite a specialist energy company being responsible contractually for compliance.

What this means for contracts with a specialist energy company

If you are negotiating an agreement with a specialist energy company for services within an embedded network please consider if the contract should contain a provision:

  • specifically nominating the specialist energy company as the primary registrant and requiring it to advise AER of the same (should the Draft Guideline be implemented); and
  • allowing the network owner to audit the specialist energy company to enable it to verify compliance with applicable exemption conditions. This should apply irrespective of whether the specialist energy company is required to comply with those conditions under the contract or pursuant to the Draft Guideline (upon commencement).

We recommend that all network owners have processes in place to monitor the compliance of any specialist energy company with the relevant exemption conditions.

Submissions

Submissions on the Draft Guideline can be made to the AER until close of business on 9 December 2022.