EWON Consultation Review – Under the new Retail Exemption Guidelines and Network Exemption Guidelines – from July 2018 – All AER exemption holders operating in NSW will be required to hold an EWON membership. Previously, membership was only a requirement for authorised retailers or networks. The anticipated changes will increase EWON membership from 56 to approximately 400. This will affect EWON’s own governance and operations as well as having a significant impact on exemption holders. On 15 March 2018, EWON – in association with KPMG – held a forum outlining the proposed changes to EWON’s structure to facilitate the transition. The significant changes will have an impact on four spheres of EWON’s operations.

By Alex Silcock, Compliance Quarter.
EWON Consultation Review
Photo by Thomas Kelley on Unsplash

Membership model:

EWON will be retaining its current membership model. That is one membership per legal entity, NOT one membership per licence. Therefore, from July 2018, every legal entity holding an authorisation or an exemption must become a member. If that legal entity holds multiple licences or exemptions, it cannot register for multiple memberships. However, corporate groups that consist of multiple companies, must obtain a membership for each legal entity that holds an exemption and/ or licence.

While each exempt entity must become a member, EWON has indicated that it will not be necessary for each individual member to engage directly with the Ombudsman. Rather, exemption holders may enter into formal arrangements with third party intermediaries which will allow the third party to liaise with EWON and undertake training and compliance activities on their behalf.

Funding model:

EWON’s funding is drawn primarily from fees paid by its members and is made up of three elements. A one-off joining fee, an annual fixed fee and casework fees. The joining fee and annual fixed fee will both be scaled according to customer numbers in response to the proposed exemption guidelines. However, in what will come as a concern for exemption holders – traditionally smaller operators – EWON intends to retain the current casework fees model. Under the casework model, fees will vary for each member. A member’s casework fee will be determined by how many customer complaints the Ombudsman receives in relation to that member and the extent to which these complaints are escalated. A more detailed breakdown of the EWON casework fees was made available to those who attended our recent Embedded Networks Regulatory Update Webinar.

Voting Rights:

EWON is also reviewing the voting rights provisions in its constitution. The current model is simply ‘one member one vote’. This is no longer seen as appropriate, given that it is anticipated that the current membership base will increase from 56 to approximately 400 with the addition of exemption holders. Due to perceived concern surrounding exemption holders holding too great of an influence under the current system, EWON is seeking submissions on proposed changes to voting rights. The proposed alternatives to the current model are: 1) one vote per dollar of fixed annual fees; or 2) one vote per customer. Both of these proposed methods will favour larger EWON members and exemption holders are encouraged to make submissions on this issue if they have an alternative suggestion regarding voting rights.

Board Composition:    

One of the foremost issues on which members vote, is the composition of the EWON board. Currently, all directors are chosen by EWON members through a nomination and voting process. EWON appears to be favouring a shift to a more structured, industry orientated board, made up of two directors from the energy retail industry, one director from the energy network sector and one director from the water industry. However, the details of the actual selection process have not been determined at this stage. There is no suggestion that EWON is contemplating reserving a board position for a representative of exemption holders or Embedded Networks.

Conclusion:

The proposed changes in the four major areas outlined above, will impact existing and new EWON members. Smaller exempt entities in particular, will need to be cognisant of the component of their membership fee which will be determined on a variable basis. The potential to be liable for significant membership fees as a result of customer complaints, should be an incentive for all networks, retailers and exemption holders to ensure that they have effective complaints and disputes resolution mechanisms in place.

To help exempt entities to deal with the transition to membership, EWON intends to establish an Operational Exempt Entities Advisory Group to act as a conduit to the board and ensure that the concerns of EWON’s newest and smallest members are understood. Concerned parties should seek to join.

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