The Australian Energy Regulator (AER) has issued infringement notices to Energex after the distributor allegedly left life support (LS) customers without power on three occasions and with no lawful excuse (https://www.aer.gov.au/news-release/energex-pays-60000-penalty-for-alleged-breaches-of-life-support-obligations).
By Dr Drew Donnelly, Compliance Quarter.
We have touched on LS obligations in embedded networks in a previous article (https://www.compliancequarter.com.au/life-support-obligations-embedded-network/). In today’s article, we take a step back and look at the life support obligations of energy businesses in general. These are obligations that apply to distributors, retailers and embedded network operators. However, the potentially tragic consequences of breaching these obligations mean that all in the energy sector must be aware of them.
We finish by suggesting some steps you might take in your business to reduce the risk of breaching LS obligations.
The latest infringement notices
LS customers are customers that require LS equipment. LS equipment is defined broadly in the National Energy Retail Rules (NERR) and includes kidney dialysis machines, ventilators and any other equipment that needs electricity in order to support life.
Energex has paid infringement notices amounting to $60,000, for allegedly breaching the NERR. Energex is alleged to have breached rule 124(1) which requires that customers registered as needing LS equipment must receive written notice of at least four business days of a planned interruption to electricity supply. This rule is essential in ensuring that LS customers are able to make alternative arrangements for their LS equipment when supply is interrupted.
LS obligations of retailers
General
Rule 116 provides that, in general, a retailer must not arrange for the de-energisation of a LS customer’s premises.
Under Rule 124(1), where a distributor advises a retailer or a customer provides a retailer with confirmation from a registered medical practitioner that there is an LS customer, that retailer must:
(a) register the premises as having LS equipment; and
(b) advise the distributor that a person residing at the premises requires LS equipment; and
(c) give the distributor relevant information about the premises for LS purposes; and
(d) except in the case of a retailer planned interruption, not
arrange for the de-energisation of the premises while the person continues to
reside at the premises and requires LS equipment; and
(e) at the time of registering the premises as having LS equipment, give
the customer:
(i) an emergency telephone contact number for the distributor (the charge
for which is no more than the cost of a local call); and
(ii) general advice that there may be a retailer planned interruption to the
supply at the address; and
(f) in the case of a retailer planned interruption, give the customer at least 4 business days written notice of the retailer planned interruption to supply at the premises (the 4 business days to be counted from, but not including, the
date of receipt of the notice).
Under Rule 124(2) where there is no longer a need for LS equipment, the retailer must inform the distributor as soon as possible of the advice received from the customer to this effect.
Prepayment and card-operated meters
Under section 59 of the National Energy Retail Law (NERL), a retailer must not enter into a prepayment meter market retail contract in respect of LS customers. If the retailer becomes aware of a customer with LS equipment requirements with such a meter, they must arrange for its removal.
Under rule 139(2) of the NERR, the retailer must, as soon as practicable after being advised by a customer in a prepayment contract that there is a requirement for LS equipment at the premises, advise the small customer of the retailer’s obligations under section 59.
Similar rules apply in Queensland only for customers on a standard retail contract with card-operated meters (see section 60D of the National Energy Retail Law (Queensland) Act 2014.)
Retailers of Last Resort
Under section 140 of the NERL, if the retailer becomes a Retailer of Last Resort, they take over the LS obligations of the failed retailer.
LS obligations for distributors
Under rule 125(2) of the NERR, where a retailer advises a distributor or customer provides confirmation from a registered medical practitioner of LS equipment requirements at a premises, the distributor must:
(a) register the premises as having LS equipment; and
(b) where this rule applies as a result of rule 125(1)(b), advise the retailer that a
person residing at the premises requires LS equipment; and
(c) give the retailer relevant information about the premises for LS purposes; and
(d) except in the case of an interruption under Division 6 of Part 4, not
de-energise the premises while the person continues to reside at the
premises and requires the use of the LS equipment; and
(e) at the time of registering the premises as having LS equipment, give
the customer:
(i) general advice that there may be a distributor planned interruption or
unplanned interruption to the supply at the address; and
(ii) information to assist the customer to prepare a plan of action in case
of an unplanned interruption; and
(iii) an emergency telephone contact number for the distributor (the charge
for which is no more than the cost of a local call); and
(f) in the case of an interruption under Division 6 of Part 4, give the customer at least 4 business days written notice of any distributor planned interruptions to supply at the premises (the 4 business days to be counted from, but not including, the date of receipt of the notice).
Under rules 124A and 126 of the NERR, both distributors and retailers must ensure they keep these details relating to LS customers up-to-date.
LS obligations for embedded network operators[1]
As well as retailers and distributors, embedded network operators have LS obligations for customers in embedded networks[2]. Condition 10 of the Network Exemption Guideline provides:
- Where notified by a customer of the existence of a requirement to maintain supply for LS equipment, the exempt embedded network service provider must, without undue delay, promptly notify the parent connection point retailer of the existence of a LS requirement in accordance with the reasonable requirements of the parent connection point retailer; and,
- the exempt embedded network service provider must, without undue delay, promptly notify the child connection point retailer when they are informed of LS requirements at a child connection point
Condition 11 of the Network Exemption Guideline provides that an exempt embedded network service provider must not disconnect supply to a LS customer without making arrangements for their safety.
What actions can you take to ensure that you fulfil your life support obligations?
Energex, under an undertaking with AER, has already committed to:
- Developing processes and system changes that will eliminate potential sources of errors;
- Developing additional and annual refresher training for staff;
- Develop additional quality assurance processes to ensure training and knowledge is maintained (see https://www.aer.gov.au/news-release/energex-pays-60000-penalty-for-alleged-breaches-of-life-support-obligations).
The following are some questions that might guide you in your own business when considering processes and policies related to LS obligations:
- Compliance Management System (CMS). As part of your CMS, does your business have an up-to-date register of all its obligations under the applicable laws and regulations, including the National Electricity Law, National Energy Retail Law and jurisdictional variations?
- Risk Management Policy and Register. The failure to meet life support obligations is a serious risk for a business in the electricity sector. Have you systematically identified the risks of disconnecting a customer with life support needs? What mitigations are in place to prevent this?
- IT systems. What kind of IT procedures does your business have in place to ensure that, once your business is notified, all others who need to know are notified of a customer with LS needs.
- Change Management: How does your business plan for and deal with significant change, including changes affecting the business’s ability meet its LS obligations? For example, power of choice reforms increase the likelihood that there will be customers signing new retail contracts. This might include customers with LS equipment requirements. Your business should have planned for this change in order to ensure that customers are protected in the transition to a new retailer.
- Breach Reporting. What is the business’s system for identifying any breach of LS obligations and reporting them?
- Internal Audit/Review. What systems do you have in place to regularly review business behaviour and ensure that you are fulfilling your LS obligations?
If you think we could be of any assistance in designing or implementing your LS obligations management program, please get in contact with us.
[1] Sometimes known as exempt embedded network service providers.
[2] Note, this is not the responsibility of Embedded Network Managers.
