Power of Choice – Distribution Pricing Principles – Proposed rule Note: the proposed rule is shown as a mark-up to current provisions of the Rules. 6 Economic Regulation of Distribution Services Part A Introduction 6.1 Introduction to Chapter 6 6.1.1 AER's regulatory responsibility The AER is responsible, in accordance with this Chapter, for the economic regulation of distribution services provided by of, or in connection with, distribution systems that form part of the national grid. 6.1.1A [Deleted] 6.1.2 Structure of this Chapter (a) This Chapter deals with the classification and economic regulation of distribution services. (b) It is divided into parts as follows: (1) this Part is introductory; (2) Part B confers on the AER to classify distribution services, to determine the forms of control for distribution services, and to make distribution determinations; (3) Part C sets out the building block approach to the regulation of services classified as standard control services; (4) Part D regulates the prices that may be charged by Distribution Network Service Providers for the provision of services classified as negotiated distribution services; (4A) Part DA deals with the preparation of, requirements for and approval of, connection policies; (5) Part E sets out the procedure and approach for the making of a distribution determination; (6) Part F regulates cost allocation; (7) Part G contains the distribution consultation procedures; (8) Part H deals with ring-fencing; (9) Part I with tariff classes and tariffs; (10) Part J deals with billing and settlements;
Part B Classification of Distribution Services and Distribution Determinations 6.2 Classification 6.2.1 Classification of distribution services (a) The AER may classify a distribution service to be provided by a Distribution Network Service Provider as: (1) a direct control service; or (2) a negotiated distribution service. Note If the AER decides against classifying a distribution service, the service is, subject to Chapter 5A, not regulated under the Rules. (b) The AER may distribution services together for the purpose of classification and, if it does so, a single classification made for the group applies to each service comprised in the group as if it had been separately classified. (c) The AER must, in classifying a distribution service or distribution services, have regard to: (1) the form of regulation factors; and (2) the form of regulation (if any) previously applicable to the relevant service or services and, in particular, any previous classification under the present system of classification or under the previous regulatory system (as the case requires); and (3) the desirability of consistency in the form of regulation for similar services (both within and beyond the relevant jurisdiction); and (4) any other relevant factor. (d) In classifying distribution services that have previously been subject to regulation the present or earlier legislation, the AER must act on the basis that, unless a different classification is clearly more appropriate: (1) there should be no departure from a previous classification (if the services have been previously classified); and (2) if there has been no previous classification – the classification should be consistent with the previously applicable regulatory approach. (e) If the Rules, however, require that a particular classification be assigned to a distribution service of a specified kind, a distribution service of the relevant kind is to be classified in accordance with that requirement. 6.2.2 Classification of direct control services as standard control services or alternative control services (a) Direct control services are to be further divided into 2 subclasses: (1) standard control services; and (2) alternative control services.
6.9.2A Confidential information If the Distribution Network Service Provider has identified any part of the regulatory proposal as submitted or resubmitted to the AER (as the case may be) under this Part to be confidential, the AER must, as soon as is reasonably practicable, include on its website a notice that sets out: (a) the fact that the regulatory proposal contains information over which a claim of confidentiality has been made; (b) the proportion of material in the regulatory proposal that is subject to any claim of confidentiality compared to that which is not subject to any such claim; and (c) the comparative proportion of material in the regulatory proposal that is subject to any claim of confidentiality compared to that which is subject to claims of confidentiality in the regulatory proposals of other Distribution Network Service Providers. 6.9.3 Consultation (a) Subject to the provisions of the Law and the Rules about the disclosure of confidential information, the AER must publish regulatory proposal the accompanying information submitted or resubmitted to it (as the case may be) by the Distribution Network Service Provider under clause 6.8.2 or 6.9.2, together with: () the AER's proposed Negotiated Distribution Service Criteria for the Distribution Network Service Provider; and () an invitation for written submissions on the , after the AER decides that the regulatory proposal compl (or that there is sufficient compliance) with the requirements of the Law and the Rules. (b) The AER must publish: (1) an issues paper not more than 40 business days after the submission, under clause 6.8.2, of the regulatory proposal; (2) an invitation for written submissions on the issues paper; and (3) an invitation to attend a public on the issues paper. (b1) The issues referred to in paragraph (b) must identify preliminary issues, whether or not arising out of the , that the AER considers are likely to be relevant to its assessment of the (however, nothing in this clause is to be taken as precluding the AER from considering other issues in making a distribution determination for the Distribution Network Service Provider). (b2) The AER must hold a public forum on the issues paper not more than 10 business days after the publication of the issues paper. (c) Any person may make a written submission to the AER on the regulatory proposal, the proposed Negotiated Distribution Service Criteria or the
(c1) The formulae that give effect to the control mechanisms referred to in paragraph (c) must be as set out in the relevant framework and approach paper unless the AER considers that unforeseen circumstances justify departing from the formulae as set out in that paper. (d) The AER must approve the total revenue requirement for a Distribution Network Service Provider for a regulatory control period, and the annual revenue requirement for each regulatory year of the regulatory control period, as set out in the Distribution Network Service Provider's current building block proposal, if the AER is satisfied that those amounts have been properly calculated using the post-tax revenue model on the basis of amounts calculated, determined or forecast in accordance with the requirements of Part C of this Chapter 6. (e) The AER must approve a proposed regulatory control period if the proposed period consists of 5 regulatory years. (f) [Deleted] (g) The AER must approve a proposed negotiating framework if the AER is satisfied that it adequately complies with the requirements of Part D. (h) If the AER refuses to approve the proposed negotiating framework, the approved amended negotiating framework must be: (1) determined on the basis of the current proposed negotiating framework; and (2) amended from that basis only to the extent necessary to enable it to be approved in accordance with the Rules. (i) The AER must approve the proposed connection policy if the AER is satisfied that it adequately complies with the requirements of Part DA. (j) If the AER refuses to approve the proposed connection policy, the approved amended connection policy must be: (1) determined on the basis of the current proposed connection policy; and (2) amended from that basis only to the extent necessary to enable it to be approved in accordance with the Rules. 6.13 Revocation and substitution of distribution determination for wrong information or error (a) The AER may (but is not required to) revoke a distribution determination during a regulatory control period if it appears to the AER that the distribution determination is affected by a material error or deficiency of one or more of the following kinds: (1) a clerical mistake or an accidental slip or omission; (2) a miscalculation or misdescription; (3) a defect in form; or
confidential information by reference to which Distribution Network Service Providers must classify any claims of confidentiality in their regulatory proposals. (c) must be Distribution Confidentiality Guidelines in force at all times after the date on which the AER first publishes the Distribution Confidentiality Guidelines under these Rules. (d) The Distribution Confidentiality Guidelines are binding on the AER and each Distribution Network Service Provider to which they apply. No changes to Part F to H – Cost allocation, distribution consultation procedures and ring-fencing arrangements Part I Distribution Pricing 6.18 Distribution Pricing 6.18.1 Application of this Part This Part applies to tariffs and tariff classes related to direct control services. and
(4) to the relevant negotiating framework prepared by the Distribution Network Service Provider and approved by the AER. (d) In determining an access dispute about the terms and conditions of access to a negotiated distribution service, the AER may: (1) have regard to other matters the AER considers relevant; and (2) hear evidence or receive submissions from AEMO and Distribution Network Users notified and consulted under the Distribution Network Service Provider's negotiating framework. (e) In determining an access dispute about access charges, or involving access charges, the AER must give effect to the following principle: Access charges should be based on the costs reasonably incurred by the Distribution Network Service Provider in providing distribution network user access and, where they consist of compensation referred to in clause 5.5(f)(4)(ii) and (iii), on the revenue that is likely to be foregone and the costs that are likely to be incurred by a person referred to in those provisions where an event referred to in those provisions occurs. 6.22.3 Termination of access dispute without access determination (a) If the AER considers that an access dispute be effectively resolved by some means other than an access determination, the AER may give the parties to the dispute notice of the alternative means of resolving the dispute. (b) The giving of such a notice is a specified dispute termination circumstance for the purposes of section 131(3) of the Law. Note: It follows that the AER may exercise its to terminate the dispute without making an access determination (See section 131(1)(d) of the Law). [Note: no changes to M to O and Schedules to Chapter 6]