Following a referral from the Minister for Energy and Emissions Reduction, Angus Taylor MP, the Standing Committee on Environment and Energy resolved on 6 August 2019 to conduct an inquiry into the prerequisites for nuclear energy in Australia.

The Committee will inquire into and report on the circumstances and prerequisites necessary for any future government’s consideration of nuclear energy generation including small modular reactor technologies in Australia, including:

• waste management, transport and storage,
• health and safety,
• environmental impacts,
• energy affordability and reliability,
• economic feasibility,
• community engagement,
• workforce capability,
• security implications,
• national consensus, and
• any other relevant matter.

The Committee is accepting written submissions, addressing one or more of the terms of reference, to be received by Monday 16 September 2019.

Read more here.

If you missed our webinar on operating as an energy retailer in Queensland, you can view it here.

In this, the first of our weekly podcasts, we discuss:

a. Energy reporting obligations;

b. A new New prohibition on disconnection and reconnection charges in NSW; and

c. Third-party agent and contractor compliance risks.

 Our presenters

Connor James BSc, LLB, GDLP, LLM (Commercial Transactions)

Connor is a qualified solicitor with Science and Law degrees and significant experience in regulatory compliance. Connor has worked for a number of energy retail and network companies including Integral Energy, Redback Technologies and Next Business Energy.

Alex Silcock LLB, BIGS 

Alex Silcock is a lawyer with Law Quarter and regulatory specialist with Compliance Quarter. He recently completed a secondment with TransGrid’s Legal, Governance and Risk team. Alex works extensively with energy retailers including in the development of their compliance programs.

In 2017 a Behind the Meter Working Group was established to draft a Code of Practice for the industry in relation to behind the meter products, now known as the New Energy Tech Consumer Code. The New Energy Tech Consumer Code will be a voluntary code but is likely to provide an advantage to signatories as consumers may perceive that signatories uphold better business practices and offer greater consumer protections than non-signatories.

The New Energy Tech Consumer Code sets a minimum standard of customer service for consumers (residential and small business) looking to purchase behind the meter products. The Consumer Code covers the whole ‘customer lifecycle’ and sets out a number of commitments at each stage i.e. quoting, contracting, and operating.

The Australian Competition and Consumer Commission (ACCC) published its draft determination on 1 August 2019. A number of submissions on the draft code were considered by the ACCC including submissions from consumer law advocacy centres, solar companies, energy ombudsman schemes, energy retailers, and individuals.

New energy tech products are defined to include solar panels, energy storage systems and other emerging products and services. For the purposes of the Code, relevant products, systems and services will be those that are small-scale and that generate, store or trade energy away from Australia’s main transmission and distribution energy networks or as distributed energy resources connected to an energy network. Also regulated will be services that support or are closely related to those products or systems, that monitor or manage a customer’s usage of energy whether on or off an energy network, or that the Code Administrator is satisfied it sits, apparently, within the Code. The definition in section 2.1 of the determination is broad and, in some ways, ambiguous.

The definitions and terms used in the Code do not align to definitions or terms found within National Energy Retail Law. It is unclear what the term ‘on or off an energy network’ means and whether this is the same as a ‘away from Australia’s main transmission and distribution energy networks.’ The Code is not intended to include ‘simple, low-cost or off-the-shelf new energy tech, such as might be purchased from a white goods or hardware store for self-installation.’ Again, this would be open to interpretation. The examples given of ‘new energy tech’ include: a power purchase agreement, an electric vehicle charging service, and a microgrid. The Code definitions are not intended to be exhaustive, reflective of the fact that this space changes quickly and in unexpected ways.

Signatories to the Code agree to abide by minimum standards of good practice which are intended to cover all aspects of the consumer experience. The Code Administrator has powers to monitor and sanction non-compliance including to propose to the Code Monitoring and Compliance Panel that, in the case of serious non-compliance, a signatory should be suspended or expelled. Signatories to the Code will only be able to offer deferred payment arrangements that are regulated under the National Consumer Credit Protection Act and the National Credit Code and provided by credit providers licensed under the National Consumer Credit Protection Act.

Signatories to the Code agree to make a number of commitments. These include that signatories will:

• use language that is accessible and that avoids jargon.
• ensure that any claims relating to performance or energy cost savings are reasonably based and where available, based on reputable sources.
• advertise the total cost price as predominantly as any component price.
• ensure that any disclaimers are clearly outlined and not buried in small print.
• be clear about when any additional costs for finance or an alternative purchasing arrangement when the cost is being recovered in the overall price.
• educate consumers of their rights i.e. that consumers can ask a salesperson to leave or end the contact at any time.
• provide a Consumer Information Product that explains the consumer protection framework;
• make various disclosures including about how the new energy tech operates and how to operate it.

The ACCC, in its draft determination, notes that the adoption of the Consumer Code is likely to result in greater consumer protections, i.e. in addition to those provided under existing consumer law.

The ACCC considers that the commitments made by signatories under the Consumer Code are likely to result in public benefits by providing protections to reduce the likelihood and degree of consumer harm that can arise from the kinds of practices sought to be addressed by the relevant provisions.

Interested parties are invited to make a submission on the draft determination by 23 August 2019.

The Australian Energy Market Operator (AEMO) has announced that it is conducting the second stage of consultation on proposed amendments to various metering procedures as a result of a number of issues across various procedures and guides raised by both proponents from industry and AEMO.

Interested parties are invited to comment on the proposed changes contained within the draft report. Submissions should be sent to AEMO by 5 PM Melbourne time on 6 August 2019.

On 20 May 2019 AEMO published the first notice stage consultation and issue paper for a package of amendments called the Metering ICF Package. Various amendments are proposed including to the following documents:

• MSATs procedures: CATs
• MSATs procedures: WIGS
• Metrology procedure: Part A
• Metrology procedure: Part B
• Service Level Procedure: Meter Data Provider Services
• Service Level Procedure: Meter Provider Services
• Service Level Procedure: Embedded Network Manager Services
• Exemption Procedure: Meter Installation Malfunctions

AEMO received 15 submissions from retailers, local network service providers, metering providers, metering data providers and intending participants. AEMO identified nine material issues from the submissions received and these include: updating MSATs about remote de-energisation and remote re-energisation, and clarifying communication for identification of incorrect NMI and metering installation.

Some of the key issues considered in the report are discussed below.

Clarifying the LNSP’s obligations in relation to creating Embedded Network Codes

The proposed amendments clarify the sections on Embedded Network Code and Rules in the MSATs Procedures: CATs and defines the timeframes for the provision of various embedded network details. AEMO noted the obligation in clause 2.9 (e) for AEMO to populate MSATs with the embedded network code provided to AEMO by the LNSP within two business days of receipt. AEMO noted that a valid Embedded Network Code and information about the appointed Embedded Network Manager is required to ensure that child NMIs are established quickly. AEMO concluded that no further changes should be made to the proposed MSATs Procedures: CATS.

Updating MSATs about remote de-energisation and remote re-energisation

The existing MSATs procedure requires the metering provider to update MSATs when a meter is remotely de-energised in remotely re-energised. However, it does not define the date to be used when updating MSATs. AEMO noted that there is a risk that different MPs may apply different logic to determine the date to use when updating MSATs which may lead to confusion within the market. The proposed amendment defines the date to be applied to remote de-energisation as the day after de-energisation.

Define timeframes for updating datastreams in MSATs

The proposed changes define the timeframe for updating data streams in MSATs Procedure: CATS as two business days. Following feedback, AEMO updated the proposed clause to reflect when the timeframe should commence and updated the clause wording to provide clarity.

There were various other changes under consideration and interested parties are advised to refer to AEMO’s website or to contact us with any questions.

Energy retailers operating in those jurisdictions which have adopted the National Energy Customer Framework offer market retail contracts, which are negotiated contracts, and standard retail contracts, which are contracts on terms substantially specified in the National Energy Retail Rules. Standing offers are pricing offers based on a retailer’s standard retail contract. They apply in a number of ‘default’ situations i.e. where a customer is no longer on a market contract and in the case of a ‘move-in’ customer.

On 18 July 2019, the Australian Competition and Consumer Commission announced that M2 Energy Pty Ltd (Dodo) and CovaU Pty Ltd had paid penalties totalling $37,800 and $12,600 respectively after the regulator issued each with infringement notices for alleged misleading claims about discounts available on the energy plans. In addition, both retailers have committed to refunding affected customers.

As was the case with Origin Energy in 2015 (and indeed with other retailers in other reported cases), the alleged contraventions related to higher market offer rates rather than standing offer rates being used in the calculation of advertised discounts. In commenting on the case, the ACCC’s Chair Rod Sims said: “energy retailers are reminded that any discount must be genuine and not based on confusing and inappropriate calculations which result in inflated percentage discount claims being advertised to consumers.”

Australian Competition and Consumer Commission v Origin Energy Limited [2015] FCA 55: This case was decided by Justice White on 9 February 2015 in the Federal Court of Australia. From 1 February to 30 June 2013 Origin’s website and contracts sent to customers contain statements that under a DailySaver energy plan, residential customers would receive a discount on the usage charges of up to 16% for electricity and up to 12% for gas. The relevant plan had a 12-month term.

Sections 29(1)(g) and (i) of the Australian Consumer Law relate to misleading and deceptive conduct with respect to goods and services and with respect to the price of goods or services. In this case, Origin Energy admitted: “that some consumers would have understood, reasonably, that the discounts would be from energy usage charges calculated by reference to rates applicable generally to consumers like themselves.” Origin Energy also made various admissions in relation to website discount representations. An agreed penalty of $325,000 was imposed.

From 1 July 2019, the Retail Electricity Code limits standing offer prices that are charged to certain consumers in New South Wales, South Australia and Southeast Queensland using a cap called the Default Market Offer. The Code also requires that retailers advertise the prices of their plans by reference to the Default Market Offer.

Retailers are reminded to comply with the Code and where the Code does not apply to ensure that they do not fall foul of the same ACL provisions.

Requirements relating to retail exemptions for the sale of electricity within embedded networks are set out in the AER Exempt Seller Guideline. Under the National Energy Retail Law any person or business who sells energy to another person for use at a premises must have either obtained a retail authorisation or operate under a retail exemption.

The AER notes that where energy selling is your main business, you are selling to a number of customers or selling in a number of states or territories, you will probably need a retail authorisation. The exempt seller regime was designed for small-scale selling activities i.e. between related entities or at a specific site.

The AER notes that energy sales do not necessarily have to be for-profit in that even passing energy on at cost to another person is a sale.

Network conversions are dealt with in section 4.4 of the Exempt Seller Guideline. A network conversion is the conversion of an existing site’s electrical wiring into an embedded network that allows the owner or operator of the site to sell electricity directly to residents or tenants of that site. Section 4.4 and the other relevant provisions of the exempt seller guideline should be read alongside the AER Network Exemption Guideline. One of the main concerns in the AER’s assessment of a retrofit is the detriment that may result to customers i.e. the loss of power of choice.

Who Holds the Retail Exemption

In terms of who should hold a retail exemption, the person or business that is selling the energy should hold the retail exemption whereas a network exemption should be held by any party that owns controls or operates the embedded network infrastructure. The AER notes that the party that should hold the retail exemption is generally the party who buys energy at the gate meter and then sells it on to the customers at the site.

In the Retail Exemption Guideline, the AER talks about agents or service providers. The AER notes that they do not generally consider that exemptions are appropriate for agents or service providers as selling energy is their core business and therefore a retail authorisation would be required.

Seeking EIC

The AER notes that the consent that you obtain to complete the network conversion under the network guideline is separate from the consent that you obtain from occupants to sell them electricity. A tenant or resident can agree to the network conversion but make separate arrangements for the purchase of energy from a third party.

In seeking informed consent from occupants, it is necessary to ensure that you have clearly, fully and adequately disclosed all matters relevant to the conversion. You must ensure that you consider a customer’s capacity to provide consent. You must also ensure that you collect evidence of consent provided including the information that you disclosed, the discussions you had, and your assessment of a customer’s capacity to consent.

If the proposed embedded network consists of wholly commercial customers and you have the consent of all affected tenants or customers, then you do not need to apply for an individual exemption and can rely on a relevant class exemption. If, however the site that you propose to make into an embedded network consists of residential customers then you must apply for an individual exemption irrespective of whether or not you have the consent of all tenants and customers.

Section 7.2.1 sets out the matters that the AER will consider in the review of an application for an individual exemption with respect to an embedded network. It is imperative that this section be read in full. This includes the following:

Mitigation of detriment regarding retail contestability and competitive offers. Customers in an embedded network can experience practical difficulties in accessing market retailers and application for an exemption involving a retrofit must attempt to remove barriers to customers purchasing energy from a retailer of their choice. The successful applicant must also limit customer detriment that may result from it potentially being a monopoly supplier. By offering an attractive product to customers as if in a more competitive market. As part of this assessment, the AER will consider whether you have sought advice from the relevant distributor on whether and how nonconsenting energy customers could be left out of the network conversion.

Customer dispute resolution services. There are a number of requirements for exempt sellers to be members of jurisdictional ombudsman schemes. Exemption sellers should examine whether they need to become a member of a jurisdictional ombudsman scheme and explain this in the application for an individual exemption. In addition, exempt sellers must have dispute resolution processes that are consistent with the Australian standard for complaints management in organisations.

Efforts to obtain explicit informed consent. Applicants must demonstrate that they have explained to potential customers implications of being in embedded network. This includes information about the benefits as well is potential detriments.

Conclusion

In conclusion, where an exempt entity is seeking to retrofit an existing building into an embedded network, it will need to consider both the network and retail exemption guidelines issued by the AER. It is important to note that there are a number of steps in the process and that the general objective is to ensure that occupants are fully aware of the consequences of the embedded network conversion.

There may be two separate approvals required from the AER. The first may relate to the network conversion itself i.e. following the provision of information in section 4.9.1 of the network guideline. Secondly, an individual exemption may be required where an embedded network consists of residential customers or where less than 100% of commercial customers have provided explicit informed consent under the retail guideline. We commonly see confusion as parties fail to understand that there are two guidelines issued by the AER, that explicit informed consent requires the disclosure of a range of matters, and that different parties may require a network exemption.