Overlooked Embedded Network Regulatory Obligations

Overlooked Embedded Network Regulatory Obligations

AU Energy Compliance
Embedded networks are privately owned electricity networks that serve multiple customers, typically, with a single connection point to the wider distribution network. The regulatory framework that applies to embedded networks is complex and it can be difficult for embedded network operators to understand and comply with their regulatory obligations. Below we examine some of the regulatory obligations, in those jurisdictions that have adopted the National Energy Customer Framework, that are commonly ‘overlooked.’ Register all Parties Each of the parties associated with an embedded network must register or be exempt. ‘This applies to the network owner or joint owners, a lease holder or legally appointed representatives if they have rights of control over the physical assets that comprise the electricity network.’ (Australian Energy Regulator, 2018b) Embedded network operators will typically register…
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The Sumo Fines: Important lesson for all electricity sellers

The Sumo Fines: Important lesson for all electricity sellers

AU Energy Compliance
The recent fines issued to Sumo Power by the Essential Services Commission of Victoria (not to mention the negative PR they received) should serve as a warning and reminder to all electricity retailers, not just in Victoria, about the most cost-effective way of dealing with customers who are struggling with their electricity bills. Electricity retailers are acutely aware of the hardship provisions in legislation and their own requirements for the drafting and adherence to their own hardship schemes and policies. The most cost-effective strategy for any electricity retailer is to identify hardship customers quickly, move such customers to a hardship scheme and establish payment plans as soon as practicable. Whilst disconnection should always be a ‘last resort’ there are times when disconnection would be justifiable and commercially pragmatic, providing the…
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AER mid-year compliance and enforcement update

AER mid-year compliance and enforcement update

AU Energy Compliance
On 18 January 2022, the AER released their six-monthly enforcement and compliance update, to summarise and report on their activities from July to December 2021. During that period, they reported: $ 1.89 million in penalties paid, from 12 infringement notices ($240,000) and 2 court decisions ($1.65 million)5 court proceedings in progress5 compliance audits undertaken2 enforceable court undertakings2 new guidelines released (regarding life support registration and Ring-fencing) The AER listed the five main compliance and enforcement priorities for the 2021-2022 period where they directed their efforts.  Of particular relevance to energy retailers are the first two priorities regarding financial hardship compliance and embedded network compliance. Priority 1 - Financial Hardship Compliance The focus on financial hardship provisions (which is set to continue), involved looking in detail into how retailers are adhering…
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The 2022-23 Default Market Offer

The 2022-23 Default Market Offer

AU Energy Compliance
The Australian Energy Regulator has published its draft Default Market Offer (DMO) 2022 to 2023 determination. Submissions on the draft DMO are open until 17 March 2022. The final decision will be published in May with changes to apply from 1 July 2022. The draft DMO reflects key structural changes occurring in the energy market with wholesale prices expected to increase in the short to medium term, coming off successive decreases in the DMO, and representative of the risk of the changing market to energy retailers. Undoubtedly, energy retailers will be looking at the draft DMO closely considering the experience of UK retailers and their own price regulation and market dynamics.   The Impact of the 2022-23 DMO The draft DMO in New South Wales for residential customers in 2022…
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Investigating Regulatory Breaches

Investigating Regulatory Breaches

AU Energy Compliance, Compliance, Financial Services
For an executive within an energy business, identifying a regulatory breach can be a gut-wrenching experience. Being told that your business has inadvertently breached the law, understandably raises concerns about the impact of the breach on your customers, stakeholders, and reputation. The obligation to report Businesses in various industries have obligations to report potential breaches to regulators. A failure to report a breach can itself be a breach, and such a failure will generally make matters worse. So businesses, including energy retailers, need to have clear processes in place to identify, assess, and report on potential breaches. Mandatory reporting obligations are found in various industries. Energy retailers operating in National Energy Customer Framework, for example, have reporting obligations under the AER's Compliance Procedures and Guidelines and further under s 273(2)…
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