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2022-2023 Compliance and Enforcement Priorities of the AER

2022-2023 Compliance and Enforcement Priorities of the AER

AU Energy Compliance
The Australian Energy Regulator (AER) has published its 2022-2023 Compliance and Enforcement Priorities. The AER will continue to focus its compliance and enforcement activities on how retailers assist customers who are facing financial difficulties and those who are within embedded networks. Customers who are facing financial difficulties The AER's focus on vulnerable consumers is understandable with market conditions expected to result in higher energy costs for consumers who are already facing higher costs of living. The AER notes that: We continue to closely monitor data on consumers facing financial difficulties, including debt levels, the number of consumers on payment plans and hardship programs, and the successful completion of those plans and programs. We remain concerned by the average debt per customer upon entry into hardship programs, and the number of…
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Who claims and who pays: the administered price cap (APC) compensation process

Who claims and who pays: the administered price cap (APC) compensation process

AU Energy Compliance
The APC compensation scheme allows certain entities to claim compensation via AEMO and the AEMC where their total costs exceed their total revenue from the spot market over an eligible period. Entities that may be entitled to claim include scheduled and non-scheduled generators, scheduled network service providers, market participants in respect of a scheduled load, demand response service providers and ancillary service providers. What is recoverable? There are two broad categories of compensation that go into the total compensation amount (TCA). These are direct costs and opportunity costs. Opportunity costs are defined in the AEMC’s guideline as follows: Opportunity cost is the value of the best alternative opportunity for eligible participants during the application of a price limit event or at a later point in time. The opportunity cost is…
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NSW Energy Minister granted emergency powers to direct coal to fuel electricity generators

NSW Energy Minister granted emergency powers to direct coal to fuel electricity generators

AU Energy Compliance
The NSW Energy Minister, Matt Kean, has been granted emergency powers under the Essential Services Act 1988 to direct coal companies to provide coal to generators.  These powers were granted in response to the current energy market crisis. We haven’t been publishing much about the current energy market crisis as we, like many in the industry, have been in the thick of it. However, from today, we will publish analysis of the regulatory responses of AEMO and state Governments. So, what do the powers allow the Minister to do and do they have any teeth? The power granted to the Minister is to direct a person to do any act or thing to increase, or facilitate the increase of, the supply or distribution of coal to a power station. The…
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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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