DRAFT
6 September 1995

SALE OF EMBEDDED GENERATOR OUTPUT TO OTHER NETWORKS:
LIABILITY FOR NETWORK CHARGES

Assume that a generator embedded within Network A contracts 
with a retailer within Network B for the energy output of the 
generating plant. The size of the generation is small, so that 
Network A continues to be a net importer of electricity at all 
times. The direction of flows downstream of Network A is 
unchanged, so that transmission charges for other networks is 
unchanged. Can the owner of Network A impose a "wheeling 
charge" on either the generator or the retailer, for the energy 
traded between them?

Paragraph 5.7 ("Excluded Services") of the ESI Tarriff Order 
allows a Distributor to levy additional charges for certain services 
excluded from the price controls specified in the remainder of the 
clause. Amongst these is "the transportation of electricity not 
consumed in the Distributor's Distribution System (ie inter-
network provider distribution)". Thus the Tarriff Order does allow 
a network owner to impose a "wheeling charge" under certain 
circumstances.

Under the assumptions of this example, the output of the 
embedded generator will be consumed within Network A. None 
(or virtually none) of it would satisfy the condition of being "not 
consumed within the Distributor's Distribution System". A 
"wheeling charge" could not be imposed under these conditions. 
The fact that the generator has an energy contract with a party in 
another network is not relevant; the generator might have no 
contract at all, but may be selling into the wholesale pool.

If the output is not physically consumed within Network A, or it 
is considered that physical consumption is too literal an 
interpretation of the Tariff Order, is the situation different? Sub-
Paragraph 5.7.2 states that "Services provided by a distributor...... 
are not excluded services ..... insofar as they consist of the 
provision of services or charges remunerated under the 
Distributor's Distribution Charges." The excluded services set out 
elsewhere in the paragraph are subject to this condition. It means 
that a "wheeling charge" may be imposed only if it imposes extra 
costs on the network owner. In fact, under the above assumptions, 
the owner of Network A would import less electricity from the 
EHV network, providing a decrease in the transmission charge 
payable to VPX.

The intent of this part of the Tariff Order is to allow a charge to 
be levied where electricity is "wheeled" across  the network, 
entering at one point and exiting at another. In this case, the 
network owner would incur an increase in the transmission 
charge payable to VPX, compared to that payable in the absence 
of such electricity. The imposition of a "wheeling charge" would 
be appropriate under these circumstances.



NICK WYATT
Project Manager Electricity
Energy and Minerals, Victoria