Unaccounted for Energy (UFE) Rule Change: Global Settlement

Unaccounted for Energy (UFE) Rule Change: Global Settlement

AU Energy Compliance
The Australian Energy Market Commission (AEMC) has implemented a new rule which commenced (after delay) on 1 May 2022. The new rule relates to a change in the current market settlement framework. The rule changes the framework from the previous framework of ‘settlement by difference’ to a ‘global settlement’ framework. What is the difference/ what’s changed? The ‘settlement by difference’ framework was designed at a time when local retailers supplied electricity to all small customers. Under this approach, electricity within a distribution area was billed to the local retailer, except for the loss-adjusted metered electricity consumed by the customers of independent retailers, within their local area. This means that the local retailer for an area bore the risk of all residual electricity losses in that area (UFE). UFE includes unaccounted…
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Increase to cap on discounts for paying energy bills on time (Victoria)

Increase to cap on discounts for paying energy bills on time (Victoria)

AU Energy Compliance
The Essential Services Commission has increased the amount energy retailers can charge Victorian customers who do not make their payment on time to 5.71 per cent.  The cap applies to ‘pay-on-time’ discounts that are conditional upon the customer paying a bill on or before the pay-by date.  Each year the commission sets the maximum Victorian energy consumers can be charged for being late with a bill payment. The new cap, applying to contracts commencing on or after 1 July 2022, rose from 3.1 per cent to 5.71 per cent due to a significant increase in the debt risk premium being carried by energy retailers. The increase in the cost of debt is driven by local factors and global factors, including rising inflation, increasing interest rates and global supply-side restrictions due to the war…
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The Essential Services Commission’s review into how Victorian energy retailers are implementing the payment difficulty framework

The Essential Services Commission’s review into how Victorian energy retailers are implementing the payment difficulty framework

Uncategorized
On 31 May 2022, the ESC published its findings of a review into how Victorian energy retailers are implementing the payment difficulty framework. The payment difficulty framework requires retailers to assist Victorians struggling to pay their energy bills. This includes helping consumers stay on top of bills by adjusting payment amounts and frequency, offering payment plans to manage missed bills or ongoing energy usage and providing advice on how to manage energy usage or apply for utility relief grants and concessions.  The review noted some positive findings. Since the framework came into effect in 2019, more customers have received tailored assistance compared to past retailer hardship programs. More customers are receiving more appropriate assistance, and there have been fewer disconnections for non-payment. But of those customers that were disconnected, over…
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EnergyAustralia ordered to pay a pecuniary penalty of 12 million dollars in respect of contraventions relating to customers who reside at premises where life support equipment is required.

EnergyAustralia ordered to pay a pecuniary penalty of 12 million dollars in respect of contraventions relating to customers who reside at premises where life support equipment is required.

AU Energy Compliance
On 3 June 2022, the Honourable Justice Colvin of the Federal Court of Australia published reasons for judgment in proceedings commenced by the Australian Energy Regulator against EnergyAustralia alleging numerous contraventions of provisions in the National Energy Retail Rules concerned with procedures to protect customers who depend upon electricity supply for the operation of life support equipment.  All energy retailers and exempt sellers should carefully review the reasons given by Justice Colvin and ensure that they will not repeat the mistakes made by EnergyAustralia. In commenting on the hardship provisions, Justice Colvin noted that “delay in registration deprives a customer of these important protections which obviously may have consequences that jeopardise, potentially, the life of the customer.”  The penalty that was imposed was based on the civil penalty regime at…
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Unprecedented wholesale prices: what should we do about it?

Unprecedented wholesale prices: what should we do about it?

AU Energy Compliance
This week, ReAmped Energy announced that it was no longer able to offer competitive electricity prices. It wants its customers to leave to find a better deal. In QLD, LPE and Discover Energy have sent similar requests to their customer base. This followed the exit of Weston Energy and Pooled Energy. The response to Reamped's announcement, from its customers, was overwhelmingly supportive. By now, consumers can see what is happening in the market and the importance of ensuring that they are on the best deal possible. There is no doubt that this energy situation (or indeed crisis) has some way to go before we reach some form of normality. There is light at the end of the tunnel, but we are not sure if it is a train or sunlight.…
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The largest penalty ever imposed under Australia’s National Energy Retail Law.

The largest penalty ever imposed under Australia’s National Energy Retail Law.

AU Energy Compliance
On 1 June 2022, the Federal Court ordered EnergyAustralia to pay a pecuniary penalty of $12m. They were also ordered to pay $300,000 towards the AER’s legal costs. The penalty is the largest ever imposed under Australia's National Energy Retail Law. The Federal Court found a total of 14,637 breaches. The breaches were comprised of failing to: register customers that required life support equipment when advised by the customer or notified by the distributor;notify the distributor when advised first by the customer;provide the required information to life support customers within the specified timeframes; andestablish policies, systems and procedures for registering and de-registering a premises requiring life support equipment. EnergyAustralia admitted to not registering more than 4,000 customers who were using life support equipment between 2018 and 2020. It also failed to…
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Updating the Distributed Energy Resource (DER) Register

Updating the Distributed Energy Resource (DER) Register

AU Energy Compliance
The Australian Energy Market Operator (AEMO) is required by law to keep a register of distributed energy resources (DER). The Register is designed to assist AEMO in relation to grid security and stability. DER installers and electricity network service providers (NSPs) are responsible for providing the relevant information to AEMO via the register. The General Framework In summary, DER installers (electrical contractors) of photo-voltaic (PV) generation systems and battery systems are required to provide information to the Register. The steps in the process are: Step 1: A contractor/ DER installer will apply to the NSP for a connection and receive approval for the installation; (This is generally done through the NSP’s DER connection webpage. The information is then added to the DER Register.) Step 2: Once approval is obtained and…
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The WA Electricity Retail Market

The WA Electricity Retail Market

AU Energy Compliance
The WA electricity industry operates differently to the NEM number of respects.  Customers that operate within the South West Interconnected System (SWIS) - the biggest electricity network in Western Australia - are split into two categories.  'Non-contestable' customers are customers who use less than 50 megawatt hours (MWh) of electricity annually. This covers the majority of residential and small business consumers.  These customers cannot choose their retailer but are supplied by govt-owned corporation Synergy and pay prices regulated by the WA Government.    'Contestable' customers are customers who use between 50 - 160 megawatt hours (MWh) of electricity annually.  This predominantly covers medium to large business consumers, and they can choose their retailer. To give an idea of coverage in the WA market, a rough breakdown of customer type for electricity retailers…
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Review of the Authorisation and Exemption Framework

Review of the Authorisation and Exemption Framework

AU Energy Compliance
The Australian Energy Regulator has published an issues paper titled Retail Authorisation and Exemption Review. Broadly, the Issues Paper considers the changing nature of the energy market, the risks posed by new products and services, and asks whether changes are needed to the Retail Authorisation and Exemption Framework. This is a major consultation that will have long-lasting ramifications for the energy market and consumers.  It builds on the work of the Energy Security Board, the Australian Energy Market Commission (particularly in relation to embedded network regulation) and prior work by the AER. The AER is undertaking a review of the Retail Authorisation and Exemption frameworks set out in the Retail Law.  The review arises as a result of the Energy Security Board’s (ESB) final advice to energy ministers in July…
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When can an energy retailer change prices for Victorian small energy customers?

When can an energy retailer change prices for Victorian small energy customers?

AU Energy Compliance
Clause 94 of the Energy Retail Code of Practice aims to provide small customers with certainty that tariffs payable under a market retail contract can only be increased by a retailer on a network tariff change date or otherwise as permitted by Clause 94. The General Rule Pursuant to subclause 2, a retailer must not increase any of the tariffs payable by a small customer under a market retail contract except with effect from a network tariff change date. Subclause 3 states that a retailer is not permitted to increase any tariffs payable by a small customer under a market retail contract with effect from a network tariff change date if the relevant contract is a fixed price period contract or the retailer is otherwise prohibited from doing so under the terms and conditions…
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