Draft Retail Exempt Selling Guideline (Version 6) March 2022

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What’s Changed?

On 9 March 2022 the AER published its draft Retail Exempt Selling Guideline (Version 6). The AER have invited stakeholder’s submissions which closes on 7 April 2022.

The draft amendments to the guideline invoke some significant changes and also involves some minor tweaking to give clarity in relation to compliance obligations. This document provides a summary of the changes.

The first point to note is the name changes to the guidelines. The AER stated:

We have revised the title of the Guideline from AER (Retail) Exempt Selling Guideline to Retail Exempt Selling Guideline. Similarly, we have changed the title of the Electricity Network Service Provider – Registration Exemption Guideline to Network Exemptions Guideline (network guideline). The title changes of both guidelines aim to promote symmetry between the two documents. The overarching purpose of each document, however, remains the same. We have also amended references to the network guideline throughout the Guideline to reflect this change.

There are 4 key amendments to the guideline which ‘exempt sellers’ should be aware of as well as general variations, class variations and core condition variations. Blow is a summary of these changes:

1. Introduction of a new hardship policy condition:

Currently, under Version 5, exempt sellers are not required to provide a full suite of hardship protections to exempt customers. At present, exempt sellers are not required to implement AER approved customer hardship policy under the Retail Law or the Retail Rules, as is the case for authorised retailers.

At present, the current conditions require exempt sellers to offer flexible payment plans and provide assistance in accessing government concessions/ rebates to customers who have identified themselves as being in financial difficulty.

During the consultation process, the AER acknowledged that many exempt sellers are on-supplying energy incidentally to their core business and may not have the administrative resources to develop and implement their own hardship policy. To assist with this the AER have prepared a ‘hardship policy template’.

(The draft template can be found here.)

This change creates a new condition (Condition 26 Hardship Policy) which requires an exempt seller to develop, maintain and implement a hardship policy which contains the statements detailed in the template. The policy must be stated in plain English. The existing Conditions 2,9 and 12 have been expanded to reflect this change:

Condition 2: Inclusion of a requirement for an exempt seller to provide any residential exempt customer a hardcopy or electronic link to their customer hardship policy at the start of their tenancy/residency/agreement or at any time on request by the exempt customer or the AER.

Condition 9: Inclusion of a requirement for the exempt seller to make the exempt customer aware of financial counselling services. Inclusion of a requirement for an exempt seller to provide any residential exempt customer a hardcopy or electronic link to their customer hardship policy.

Condition 12: Clarification that an exempt seller’s flexible payment options must offer a payment plan to an exempt customer who has identified themselves as being in financial difficulty. Inclusion of a requirement that the exempt seller must not make changes to an exempt customer’s payment plan without their agreement.

2. The introduction of a new information provision conditionAER Factsheet

Under the current guideline (Version 5), exempt sellers are required to advise customers in writing, at the commencement of the supply agreement, of the customers rights under state and territory laws. This includes retail choice and metering options. Exempt sellers must provide that information if the customer or AER request it.

During the consultation process, most stakeholders supported the provision of a factsheet. They also supported the need to highlight the potential costs associated with accessing retail competition.

The proposed amendment in relation to the factsheet is an expansion of Condition 2. The variation is:

Inclusion of a requirement for an exempt seller to provide any residential exempt customer at the start of their tenancy/residency/agreement of the following:

• a hardcopy or electronic link to our factsheet, and

• a copy of the factsheet, along with information relating to any right of the exempt customer under state or territory laws, to elect to purchase energy from a retailer, and of their choice and information on the options for metering that would allow this choice, following an enquiry from an exempt customer seeking to access retail competition.

The exempt seller must also provide a copy of the factsheet as soon as practicable, upon request by the exempt customer or the AER or following an enquiry from an exempt customer seeking to access retail competition.

Exempt sellers will need to provide their customers with an AER factsheet. This factsheet sets out for these customers the process and the difficulties they may face if they want to purchase energy directly from a retailer.

(The draft factsheet can be found here.)

3.Clarification of  the AER’s expectations re: conversions to embedded networks:

Conversions (retrofits) to embedded networks must only occur when prospective customers are fully informed of the impacts and provide their consent. Version 5 of the Guideline details the information that network owner/operators must provide prospective exempt customers to enable them to make an informed choice as to whether they want to be part of the proposed retrofit (and to provide their explicit informed consent). Network owner/operators must submit examples of the information provided to prospective exempt customers to the AER as evidence that they have met the retrofit requirements set out in the network guideline.

The AER have added an additional sentence in the Guideline to link applicants to the network guideline, where they provide requirements for marketing campaigns that applicants must conduct, to ensure proposed customers are fully informed. The AER have clarified under section 4.4 their expectation that applicants obtain explicit informed consent in the form of a signed consent form wherever possible.

The AER have also made allowance for  a customer’s electronic signature as an acceptable form of explicit form consent. There is also further clarification that verbal consent is only acceptable in instances where the consent is evidenced in such a way that it can be verified and made subject of a record.

In acknowledging the significant impact of retrofits on customers arrangements and protections, the AER (Guideline) has made several changes to the information requirements to demonstrate that potential EN customers are fully informed of the proposed arrangements. (see appendix B of the draft Guideline)

The following is a summary of the changes in relation to clarifying statements and requirements:

• that where a third party is submitting the application on the applicant’s behalf, a statement or letter verifying that the third party has the authority to act on their behalf must be provided;

• a footnote that specifies the applicant must be a legal person, for example an individual, company, corporation or body corporate;

• a new inclusion for an applicant to disclose if they have ever been refused an energy selling exemption or retail licence (retail authorisation) in any state or territory;

• a requirement for the applicant to provide information as to whether any customers will be ‘wired out’ of the embedded network and if so, to provide supporting information;

• a retrofit application requirement to disclose the types of meters to be installed if the site relates to the proposed retrofit;

• a retrofit application requirement to provide explicit informed consent records for customers affected by a proposed retrofit. This is a change from the previous requirement to confirm that evidence of written consent has been acquired for the purposes of a retrofit application;

• a new requirement to confirm the explicit informed consent percentage calculation for total customers affected by the proposed retrofit;

• an expansion of the requirement for a retrofit applicant to confirm whether they sought advice from the distributor (as to whether non-consenting customers could be wired out of the embedded network) to include a requirement to provide evidence of the correspondence;

• a new requirement for applicants to evidence whether they are a member, or have taken steps to become a member of an energy ombudsman scheme;

• a clarifying statement that we will assess the need for ombudsman scheme membership on a case-by-case basis;

• a new requirement for applicants to provide dated records of consultation and meetings with all affected customers;

• a new retrofit application requirement to agree to observe conditions 4.9.1 to 4.9.7 of the network guideline, and

• a new requirement for retrofit applicants to provide information to prospective customers about the pros and cons of being an embedded network customer.

4. Ombudsman scheme membership:

This change relates to the introduction of a requirement to provide evidence of steps taken to obtain ombudsman scheme membership, as part of the individual exemption application process.

The Guideline requires exempt entities to have dispute resolution processes for small customers. It also requires exemption holders with residential customers to join the energy ombudsman scheme in their state or territory if membership is available.

In their consultation paper, the AER noted feedback from our ombudsman stakeholders suggesting that many exempt entities are failing to follow through on their membership requirements. Non-compliance with this requirement deprives residential customers of an important customer protection – access to independent dispute resolution.

Submissions to the consultation paper indicated support for the AER’s proposal to introduce a new requirement that individual exemption applicants must provide evidence of the steps they have taken to obtain ombudsman membership in the jurisdiction/s in which they intend to sell energy to residential customers. The requirement to join an ombudsman scheme is a standard condition imposed on most individual exemptions approved by the AER. As such, this requirement has been included in Appendix B of the Guideline, noting that if the AER determine an exempt seller is required to join an ombudsman scheme, the exempt seller must provide this evidence as part of their individual exemption application.

General Condition variations:

The AER have included a new section (section 9) in the Guideline outlining the different processes the AER will follow when varying existing deemed and registered exemption conditions, as well as conditions attached to existing individual exemptions.

The AER have clarified in Appendix D, that exempt sellers need to request a variation to an existing individual exemption where the nature of the exempt seller’s energy on-selling arrangement has changed at the relevant exempt site.

The AER have updated their process for cancelling a registrable exemption to recognise that, when an exempt seller requests their exemption be cancelled, the AER will amend the exemption to reflect in the public register of exemptions that it is no longer effective.

Class Variations:

The AER have also made minor variations to exemption class criteria and applicable conditions. The changes are:

D1 and D2

The AER  have updated the class restrictions of D1 and D2 to reflect that exempt sellers will be required to apply for an individual exemption if proposing to retrofit an existing site. A further clarification has been added to the class restriction of D1 to confirm an individual exemption is only required if less than 100% of commercial customers provide their explicit informed consent to the retrofit. The AER have added marinas to the list of example site types where the energy on-selling arrangements may be captured under D1.

D3

The AER have removed a reference to holiday accommodation and note D3 captures persons selling metered energy to occupants of accommodation on a short-term basis.

R1

The AER have added marinas to the list of example site types where the energy on-selling arrangements may be captured under R1.

R2

The AER have clarified that the application of R2 may apply to owners or operators of marinas who sell energy to residents principally residing on site.

R4

The AER have updated the registrable exemption class description of R4 to improve consistency with the description of the related NR4 network class exemption.

R8

The AER have corrected the R8 exemption class application to clarify that these exemption classes are not site specific.

Core Condition Variations:

In addition to the exemption condition variations set out in section 4 and 5 above, The AER have varied additional conditions. These amendments are refinements of existing conditions were introduced to improve support for residential customers.

Condition Variation Condition 1 – Obligation to supply

The AER have clarified that relevant disconnection provisions are provided under Conditions 9(2)-(7).

Condition 8 – Undercharging and overcharging

The AER have increased the overcharge amount threshold from $25 to $50 to reflect the current threshold requirements of Rule 31(6) of the Retail Rules.

Condition 13 – Concessions and rebates

The AER have added a clarifying timeframe to when an exempt seller must apply an issued rebate, concession, or assistance to an exempt customer’s bill.

Condition 16 – Dispute resolution

The AER have removed the title of the Australian standard dispute resolution guideline to avoid the document title becoming outdated as new editions are published. The AER have removed the sentence ‘…and in the absence of a determination of the relevant tenancy tribunal if the customer is a tenant’ to be consistent with the dispute resolution requirements of the network guideline.

Condition 21 – Continuity of supply

The AER have revised the condition to specify that exempt sellers, if they are unable to continue selling energy, they must notify their exempt customers and the AER immediately and advise of the steps they are taking to arrange an alternative supply.

The ’Draft’ was compiled after consultation with various stakeholders and the consideration of stakeholder submissions. As sated above, the draft itself is now open for stakeholder submissions. We will advise of any development on the final draft and likely date of commencement.

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