A New Exempt Seller Guideline (for NECF)

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On 9 March 2022 the AER published its draft Retail Exempt Selling Guideline (version 6) for public consultation, which includes a copy of the following accompanying documents:

  • draft AER factsheet titled How to access retailers for your energy needs if you live in an embedded network; and
  • draft Exempt Seller Hardship Policy template.

In this article we examine the implications of the proposed revised Guideline on embedded network operators (with operations in NECF).

Key Changes

The proposed changes to the Retail Guidelines will result in greater certainty for embedded network operators and consist of sensible and balanced mechanisms designed to introduce additional consumer protections into a growing market.

The AER notes the following key amendments being proposed, that may be of particular interest to our clients:

  • The introduction of a new hardship policy condition;
  • the introduction of a new information provision condition for exempt sellers to provide their customers with an AER factsheet. This factsheet sets out for these customers the process, and the difficulties they may face, if they want to purchase energy directly from a retailer;
  • clarifying our expectations that conversions to embedded networks must only occur when prospective customers are fully informed of the impacts and provide their consent; and
  • the introduction of a requirement to provide evidence of steps taken to obtain ombudsman scheme membership, as part of the individual exemption application process.

The first three of the proposed changes were supported by Compliance Quarter in its earlier submission to the AER.

The hardship provision

The AER is proposing a new condition that includes a requirement to develop, maintain and implement a hardship policy. The AER has helpfully developed a template policy. This requirement will apply to those exemption classes that capture the sale of electricity to residential customers.

There is no requirement under the Retail Law or the Retail Rules for exempt sellers to maintain and implement an AER-approved customer hardship policy to identify and assist residential customers experiencing payment difficulties, which is required by authorised retailers under the Retail Law.

The AER Factsheet

The AER has published a draft Factsheet that will be used by exempt sellers when selling electricity and meeting condition 2 of the exemption conditions. Again, by providing the contents of the Factsheet, the AER will be reducing the regulatory burden on exempt operators.

The AER notes that exempt sellers will be able to provide additional information to customers designed to assist exempt customers in their understanding of the requirements to exit an embedded network.

Evidence of seeking ombudsman membership

The AER has proposed that as part of an individual exemption application, an applicant provide evidence of the steps it has taken to join the ombudsman scheme in the relevant jurisdiction.

Embedded network retrofits

The AER rejected our proposed a fast-track approval process, but you can’t blame us for trying. The AER has however proposed some useful changes to the guidelines. These include clarifying section 4.4. to state that the AER would obtain EIC in the form of a signed consent form where possible but further acknowledging that electronic and verbal consent will be permitted (where such records can be verified).

It is important to note that obligations regarding retrofits are also found within the Network Exemption Guideline and the AER is yet to publish its proposed updated Network Exemption Guideline.

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