The Australian Competition and Consumer Commission (ACCC) and the Treasury have been progressing policy work on the implementation of the Consumer Data Right (CDR) in the energy sector. In this update we respond to some frequently asked questions relating to the energy CDR.

1. What is the CDR?

The CDR gives individuals and businesses a right to access specified data in relation to them held by businesses; and to authorise accredited third parties to access this data. The CDR is being rolled out sector by sector, beginning with the banking sector, then progressing to the energy and telecommunications sectors. For more general information on the CDR click here and here.

The CDR is being implemented through a complex combination of legislation, rules, ministerial designations and data standards. The ACCC, the Treasury, the Office of the Australian Information Commissioner and the Data Standards Body (Data61) all have key roles in its development and implementation.

The ACCC recently released a position paper setting out in broad terms its proposal for implementing the CDR in the energy sector. In addition, the Treasury has just consulted on the types of data that are to be contained in the energy CDR. [1]

2. How is it proposed that the CDR be applied to the energy sector?

After consulting on several models for applying the CDR to the energy sector, the ACCC has decided on the ‘AEMO gateway model’. This model provides that the Australian Energy Market Operator (AEMO) will have a gateway function, providing CDR data from data holders (which will include retailers and potentially distributors) to accredited data recipients (ADRs). AEMO may also be a data holder providing CDR data directly to ADRs.

Currently, only an energy CDR for electricity data is proposed (i.e. no gas at this stage). In addition, it is not currently proposed that the energy CDR be applied to embedded networks. Stakeholders should expect the CDR to be extended in those directions in future, however.

3. Which data will be contained in the dataset?

The Treasury has proposed the following datasets:

• National Metering Identifier (NMI) standing data fields. This is data currently held by AEMO which specifies the nature of a connection point and includes such fields as ‘Average Daily Load’(ADL), Network Tariff Codes and Metering installation types;
• Metering data. This is the electricity consumption data that is processed through AEMO’s market systems;
• Customer provided data. This is personal data relating to the customer held by the retailer such as a customer’s full name, email address, phone number and date of birth;
• Billing data. Historical information on how much the customer has been charged over a period and their payment patterns;
• Retail product data. This is information relating to the specific tariffs that customers are on and may include general and restricted plan data;
• Distributed Energy Resource register data. This new register contains information relating to distributed energy devices including small scale battery storage systems, and rooftop solar PV.

4. Who will be a data holder?

This is still not entirely clear. At this stage it looks as though only market retailers in the National Electricity Market jurisdictions (i.e. Queensland, NSW, ACT, Tasmania, SA and Victoria), the AEMO, and potentially distributors, will be ‘data holders’. This means that participation in the CDR will not be mandatory for authorised or licensed retailers that supply energy exclusively in embedded networks. Nor will be it be mandatory for a range of other energy suppliers such as exempt sellers, ‘behind-the-meter’ solar retailers and suppliers in micro-grids. Some of these parties may wish to become ADRs, however. See below.

5. Who will be able to become an ADR?

A range of energy businesses may be interested in becoming an ADR. As well as retailers and distributors, exempt sellers, brokers, and metering co-ordinators, among others [2] may have an interest in accessing this data. The criteria for becoming an ADR will be set out in modified CDR rules yet to be established for the energy sector. However, we can look at those rules that have already been established for the banking sector to get some idea what the criteria for accreditation will be. It is likely to include satisfying requirements in relation to:

• Being a ‘Fit and proper person’;
• Information security;
• Dispute Resolution processes; and
• [3]

6. What is the timeline for implementation?

Originally it was planned for the CDR to come into effect in the energy sector in the first half of 2020. However, with many aspects of the energy CDR still to be finalised, this has been pushed back. ACCC has committed to releasing an energy CDR implementation timetable to stakeholders later in 2019.

[1] See https://www.accc.gov.au/system/files/ACCC%20-%20CDR%20-%20energy%20-%20data%20access%20models%20position%20paper%20-%20August%202019.pdf and https://treasury.gov.au/sites/default/files/2019-08/c2019-t397812.pdf.

[2] Large Customers are permitted to appoint their own metering co-ordinators.

[3] See https://www.accc.gov.au/system/files/CDR%20draft%20accreditation%20guidelines.pdf.

The Australian Commonwealth Government has announced a fund designed to support feasibility studies into more reliable, secure and cost-effective energy supply to regional and remote communities in Australia. The program will fund projects between $100,000 and $10m.

The objective of the program is to support regional and remote communities to investigate whether replacing, upgrading or supplementing a microgrid or upgrading existing off-grid and fringe-of-grid supply with microgrid or related new energy technologies would be cost-effective.

The program is available to you for application if  your project is located in an inner regional, outer regional, remote or very remote area as defined by the Australian Statistical Geographic Standard (ASGS) Remoteness Area

Read more here.

Last month the Australian Competition and Consumer Commission (ACCC) released its Draft Determination and Interim Authorisation for the Large Format Retail Association (LFRA) to collectively purchase electricity.[1] In this update we look at the mechanism that allows businesses to do this and its implications for the energy sector.

1. Why is authorisation required?

The Competition and Consumer Act 2010 (the Act) prohibits anti-competitive conduct in a variety of ways. Provisions in the Act which prohibit specific behaviour include:

• division 1 of Part 4 of the Act which restricts ‘cartel conduct’. This occurs when a corporation makes, or give effect to, a contract, arrangement or understanding that fixes prices, restricts outputs, allocates customers or suppliers, or involves bid-rigging
• section 45 of the Act which prohibits a proposed contract, arrangement or understanding that has the purpose, or would have or be likely to have the effect, of substantially lessening competition.

Any businesses who are engaging in conduct, or plan to engage in conduct, which risks breaching these provisions can apply to the ACCC under sections 90(7) and 90(8) of the Act for authorisation to engage in that conduct.

The ACCC may grant such an authorisation if it is satisfied, in all the circumstances, that the proposed conduct would result or be likely to result in a benefit to the public, and the benefit would outweigh the detriment to the public that would be likely to result.

2. Who has been granted interim authorisation and what does this mean?

The LFRA is an association of major Australian commercial retailers. It is seeking authorisation to pool its members’ electricity demand and collectively invite tenders, and negotiate with suppliers, on the basis of that aggregated demand.

The participants constitute an impressive list with 32 major retailers signed up including such big names as Harvey Norman, JB HiFi, Bunnings, Spotlight and IKEA.

The draft determination proposes to grant authorisation for 11 years. The ACCC also granted interim authorisation to enable LFRA and its members to begin initial stages of the tender and negotiation process.

The interim authorisation allows for this list of participants to grow in the future, as long as it does not exceed 1 per cent of the demand in any state or territory.

3. What impact might this have on energy retailers, suppliers and embedded networks?

Any organisation which owns, operates or controls a private electricity network (i.e. an ‘embedded network), or supplies energy in such a network, needs to consider how this might affect their business. For example, if an organisation plans to convert an existing shopping centre into an embedded network which contains one of these retailers, they may face significant resistance or increased costs in doing so.[2]

On the other hand, individual embedded network operators may want to consider whether there would be benefits in collaborating with other embedded network operators to pool their electricity demand and consider applying to the ACCC for authorisation to do so.

This will present a business opportunity for some energy retailers and a problem for others. Energy retailers with longstanding agreements with some of the retail chains contained in the LFRA stand to lose business. On the other hand, this could present an opportunity for smaller and new entrant retailers to lock in energy contracts for a significant period allowing the opportunity to grow their business.

Overall, the ACCC’s view is that this will increase competition in the energy retail market and incentivise new energy generation (to supply that demand over the period).

A final determination will be made on the LFRA’s application sometime in November.

[1] See https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/large-format-retail-association-limited-ors.

[2] For example, they may need to consider the possibility of ‘wiring out’ these retailers to allow them to continue with their existing supply agreements.

The Australian Energy Regulator (AER) has just announced $40,000 in penalties for a caravan park operator for allegedly selling electricity to customers at caravan parks without holding either a retailer authorisation or appropriate retail exemptions, as required to do so by law.

There have been several such infringement notices in recent years for entities selling energy without holding the correct exemption.[1]  In light of this, it would be wise for all energy sellers to carry out an internal compliance audit and check that their operations are compliant.

1. The issue

Under section 88 of the National Energy Retail Law, any individual that sells energy must hold a retail authorisation of an exemption from the Australian Energy Regulator, when operating in the National Energy Customer Framework jurisdictions (Queensland, NSW, ACT, and Tasmania). Retail or multiple activity exemptions are also required by the Essential Services Commission for selling energy in Victoria.

Retail authorisations and retail exemptions have some similarities. They both require sellers of energy to cohere with consumer protections which include:

• consent requirements
• minimum requirements for invoices
• disconnection restrictions
• payment plan requirements
• life support provisions.

A retail authorisation, however, subjects the seller of energy to more onerous obligations under the National Energy Retail Law and National Energy Retail Rules including:

• extra informed consent requirements
• providing ‘standard retail contracts’ to customers
• disclosure requirements
• pricing information requirements (e.g. submission to the ‘Energy Made Easy’ website)
• performance and compliance reporting to the AER.

Historically, retail exemptions have been the more common method for selling energy within an ‘embedded network’;[2]  the kind of private energy network which is often found in caravan parks, shopping malls, strata and retirement villages. Any embedded network wishing to determine whether they are eligible for an exemption or should operate under a retail authorisation should consult the Retail Exempt Selling Guideline.[3]

If an energy seller does not hold either a retail authorisation or an exemption then it is likely that their customers are being deprived of important customer protections, hence why this is an enforcement focus of the AER.

Note, a new framework for embedded networks that would require most entities to hold a retail authorisation has been recommended by the Australian Energy Market Commission and is due to be considered by the Council of Australian Governments’ (COAG) Energy Council.[4]

With respect to the latest penalties, while the caravan park operator held a range of different exemptions, it did not hold exemptions specifically for the two sites in question, as it was required to do so.

2. The difference between a retail, network and generation exemption

It is common for embedded networks to not only involve the sale of energy to customers but its distribution (through an embedded network), and sometimes its generation (such as through solar PV). Any party that owns, controls or operates an embedded electricity network needs to ensure that they hold a ‘network exemption’ or distribution licence, in addition to any retail authorisation or exemption.[5]

Those owning, controlling or operating gas distribution pipelines need to check whether this requires a licence in the particular jurisdiction they operate in.

If generating energy, an entity should check whether they are required to hold a generation registration exemption as determined by the Australian Energy Market Operator.

3. What you need to do

Any entity involved in the operation of an embedded network, whether through selling energy, operating network assets or generating energy, should carry out a compliance check to ensure they are fully compliant. This includes asking the following questions:

• Does every entity that owns, operates or controls an embedded network hold the necessary network exemption? I.e. it is not enough for just one of those entities to hold the exemptions.
• Does every entity that sells energy on the embedded network also hold a retail exemption or retail authorisation?
• Are entities selling under the correct type of exemption (e.g. deemed versus registrable) and correct exemption class (e.g. R4 or D3)?
• Is an exemption is in place for every site that energy is sold in? Note that one exemption cannot cover multiple sites.
• Are all exemption details on the AER website correct and up-to-date? E.g. are all the National Metering Identifiers (NMIs) for that site listed?
• Is there compliance with all state laws which also place restrictions on embedded networks? For example, in NSW and Queensland there are restrictions in place which restrict how much can be charged for energy in residential parks and manufactured housing.

If we can be of any further assistance, please don’t hesitate to contact us.

[1] See also https://www.aer.gov.au/retail-markets/compliance/enforcement-matters/infringement-notices-issued-to-taplin-for-allegedly-selling-energy-without-appropriate-authorisation-or-exemption and https://www.aer.gov.au/retail-markets/compliance/enforcement-matters/property-company-stockland-pays-five-infringement-notices-for-selling-electricity-without-an-exemption.

[2] This is changing with many more energy sellers in embedded networks now holding retail authorisations.

[3] https://www.aer.gov.au/retail-markets/retail-guidelines-reviews/retail-exempt-selling-guideline-march-2018.

[4] For more information see https://www.aemc.gov.au/sites/default/files/2019-06/Updating%20the%20regulatory%20frameworks%20for%20embedded%20networks%20-%20FINAL%20REPORT.PDF.

[5] For further information on network exemptions see https://www.aer.gov.au/networks-pipelines/guidelines-schemes-models-reviews/network-service-provider-registration-exemption-guideline-march-2018.

With few exceptions, where a new connection to the National Energy Market is set up, or where an existing meter needs replacing, a retailer (through its Metering Coordinator) must replace that meter with a smart meter (National Electricity Rules, 7.8.3).

A smart meter (also known as an ‘advanced’ meter or a ‘type 4’ meter) is a device that digitally measures energy use. Energy data is sent to the retailer automatically, without the need for the meter to be manually read by a meter reader. Other mechanisms included within a smart meter allow for:

• remote switching power on or off;
• measuring power quality at the premises;
• customer monitoring of energy use; and
• notifying the distributor when the power goes out.

The Rule Change

In December 2018, the AEMC made a final rule that requires retailers to complete meter installations for new connections or a simple meter exchanges by a date agreed with the customer. We reported on the background to the proposed rule here.

If no timing can be agreed, then the retailer will need to install the meter within six business days at a new connection, or within 15 business days if the customer has requested a simple meter exchange.

For a meter exchange that requires a connection alteration to be completed by a distribution network service provider (DNSP), the retailer is required to install the meter by a date agreed with the customer and the DNSP.

Under the final rule, metering coordinators must replace or repair a small customer’s malfunctioning meter as soon as practicable, but no later than 15 business days after they have been notified of the meter installation malfunction

The rules are heavily reliant on contact with the customer. Stakeholders raised concerns that some customers may be non-contactable. Unfortunately, this issue was not addressed in the final rule.

There are additional rules regarding the provision of information to customers in relation to metering installations. Rule 56C of the National Energy Retail Rules sets out the obligations of retailers with respect to installation timeframes for electricity meters. Retailers are required to publish various information about their obligations under the National Electricity Rules. That information must also be provided to a customer on request and in writing.

The Australian Energy Market Commission has published its final report on regulatory sandbox arrangements to support proof of concept trials. The final report contains recommendations to the Council of Australian Government’s Energy Council aimed at better facilitating regulatory sandbox arrangements in the National Energy Markets.

The final report follows the publication of the consultation paper on 20 December 2018 that sought feedback from stakeholders on the need for regulatory sandbox arrangements. The commission published its interim advice on 7 March 2019 proposing a regular tree sandbox initiative that could make use of a variety of existing and new tools to be applied according to their suitability within a proposed trial. Stakeholders overwhelmingly supported the introduction of the regulatory sandbox toolkit.

The objective of the regulatory sandbox is to encourage innovation that has the potential to contribute to the long-term interests of consumers. Tools within the regulatory sandbox include the following:

• Coordinated feedback and guidance and regulatory issues. A new coordinated approach will be implemented to provide feedback and guidance to proponents of innovative trials, technologies and business models. This would be led by the AER as the first point of contact for proof of concept trials. The AER has been tasked with providing “fast, frank feedback” on a range of issues.
• A new AER regulatory waiver power. Limited regulatory relief will be provided to eligible trials. This will enable trials to obtain an exemption from specific rules or from registration requirements. This would involve a broad power for the AER to grant specific exemptions and waivers to facilitate the conduct of proof of concept trials, subject to trial projects guidelines developed by the AER.
• A new AMC rule change process for proof of concept trials. Where a rule change or alteration is required, a new rule change process will be available with the aim of completing rule change processes within 10 weeks.
• Existing regulatory tools. There are a variety of existing regulatory tools including the AER’s ring-fencing waivers and retail exemptions.

The implementation of the recommended sandbox tools will require a package of changes to the national energy law and rules.  You can read the Commission’s full report here.