AER’s audit: Provision of timely and accurate information

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The Australian Energy Regulator has released the results of its latest compliance audits looking at the provision of timely and accurate information. The audits in question looked at compliance by EnergyAustralia, M2 Energy, Red Energy and 1st Energy pursuant to Section 282 of the National Energy Retail Law. The audit covered reporting activities for the 1 October to 31 December 2019 reporting period. The audits identified a number of areas in which the audited businesses could improve how they prepare, present, and report performance data to the Australian Energy Regulator (AER).

Both retailers and distributors must establish and implement policies and procedures to enable them to effectively monitor compliance with the National Energy Retail Law and the National Energy Retail Rules. One such requirement is found within Section 282 of the Retail Law which requires the provision of accurate and timely information to the AER. Such information is used by the AER in its economic and market monitoring functions. The AER relies on the information provided to prepare annual retail reports, and quarterly retail energy performance reports published throughout the year.

Looking at the audit reports themselves, we find that EnergyAustralia’s interpretation of performance indicators relating to payment plans and the system logic used to develop those reports were not aligned to the AER’s definition in Section 2 of the AER (Retail Law) Performance Reporting Procedures and Guidelines (Version 3, April 2018). As a consequence, incorrect customer payment plan data was submitted for the specific period. EnergyAustralia identified and self-reported this finding to the AER prior to the audit engagement. The audit identified an opportunity to ensure that quality assurance controls and procedures were consistently documented and applied across all accountable business units. The audit identified the opportunity to formalize training in relation to performance reporting, noting that team members at EnergyAustralia involved in performance reporting processes regularly receive on-job training.

Looking at the Red Energy compliance report, the audit identified the incorrect setup of a script for one performance indicator that led to the miscategorization of residential customers as small business customers. The audit noted that this resulted in negligible variances for the relevant performance report. The audit identified an improvement that could be made by Red Energy in enhancing guidance on the development of performance report to include detail on the roles and responsibilities, training requirements, data sources, quality assurance procedures and document retention requirements. The audit noted that key team members involved in the performance reporting process received regular on-the-job training, however that training had not been formalized. The audit noted that trend analysis was performed to identify notable quarter-on-quarter and year-on-year movements in performance data however evidence of such investigations had not been retained.

There were five findings in the audit of 1st Energy’s performance reporting. These included that the procedural documents did not reflect the current practices and processes followed by 1st Energy in developing performance reports, that there was no formal quality assurance process to ensure that the data reported was accurate and complete, that limited training had been provided on data extraction and filtering processes, and that there was an improvement opportunity in enhancing data collection used for reporting processes.

Findings from the M2 Group compliance audit included that M2 Energy’s performance reporting procedure and supporting documents were outdated. The main document that had been used had not been updated since 3 March 2017 and there were references to indicators from Version 2 of the AER Guidelines rather than Version 3. Furthermore, the audit found that staff responsible for reporting did not utilize M2 Energy’s internal procedures document when undertaking reporting, but referred directly to the AER’s current guideline.

You can read the audit reports in question here.

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