The Australian Energy Regulator (AER) oversees the authorisation process for energy retailers in Australia. If you’re considering joining this market, it’s crucial to understand the AER’s guidelines and requirements. This article will outline the preparatory steps your business needs to take before applying for a retailer authorisation. If you would like to know if your business is ready to apply, please contact us.
What is a Retailer Authorisation?
A retailer authorisation allows businesses to sell energy (gas or electricity) under the National Energy Retail Law (Retail Law). The AER provides a specific guideline document called “AER Retailer Authorisation Guideline” to guide businesses in this process. The guideline details the application process, entry criteria, obligations, and procedures for authorisation amendments, revocation, surrender, and transfer.
Preparing for a Retailer Authorisation
Before applying for an authorisation, it’s essential to assess your business against the AER’s entry criteria, which are:
- Organisational and Technical Capacity: The AER assesses an applicant’s industry experience, operational systems, and staff expertise. Additionally, if you intend to outsource some of your retail functions, you need to provide details of your third-party arrangements.
- Financial Resources: You must demonstrate that you have sufficient financial resources to support your planned retail operations. This requirement includes providing audited financial reports and details of any bank guarantees or arrangements to access additional capital.
- Suitability Criterion: This involves assessing the applicant’s character and reputation. The AER will scrutinise your previous commercial dealings, compliance history, and any criminal convictions.
After ensuring that your business meets the above criteria, you should consider the following:
Create a Detailed Business Plan
Your business plan should outline your business strategy, objectives, and operational forecasts. It should clearly highlight revenue and expenses, with assumptions for these forecasts. Additionally, it should include a cash flow analysis based on your operational forecasts.
Develop Compliance and Risk Management Strategies
It’s crucial to establish systems and procedures that enable compliance with all retailer obligations under the Retail Law and Retail Rules. You should also develop a risk management strategy covering both operational and financial risks. The AER prefers strategies that have been externally audited or have undergone an external assurance process.
Establish Agreements With Market Participants
You should have agreements or arrangements with key market players within the jurisdictions in which you intend to operate. This includes distribution businesses and the Australian Energy Market Operator (AEMO).
Conduct a Suitability Check
Your application should demonstrate that you are a suitable person to hold a retailer authorisation. This process involves checking the compliance history, criminal records, and any revocations or refusals of licences.
Applying for a retailer authorisation involves more than simply filling out a form. It requires careful planning, a comprehensive understanding of the requirements, and a strong commitment to fulfilling the obligations under the Retail Law and Retail Rules. By following the AER’s guidelines and adequately preparing, your business will be well-equipped to navigate the application process and become an authorised energy retailer.