Selling Electricity: Licence Requirements

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A variety of businesses are involved in selling energy. These businesses include caravan parks, building managers, shopping centres, office buildings, airports, industrial parks and solar power providers.

Energy sellers in the Eastern States of Australia must either operate under licence or an exemption. The sale of energy, under the Retail Law, includes the sale of energy at cost, i.e. without profit.

selling energy

National Consumer Framework

The Eastern States (except Victoria) are governed by the National Energy Retail Rules (‘Retail Rules’) and National Energy Retail Law (‘Retail Law’), implemented as part of the National Energy Consumer Framework.

Obtaining an electricity retail authorisation is a complex and time-consuming process. Broadly, it requires that an applicant prove to the Australian Energy Regulator (‘AER’) that it can meet financial, operational, and technical requirements.

An alternative to selling electricity under a full retail authorisation is the sale of energy under an exemption. It is not possible to operate under both an authorisation and exemption.

Selling Energy – Policy background

The National Electricity Objective, as stated in the National Electricity Law, is:

to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of electricity with respect to – price, quality, safety, reliability, and security of supply of electricity; and the reliability, safety and security of the national electricity system.

Newer models for the sale of electricity have the potential to provide consumers with lower cost energy and to increase the reliability of supply to consumers. These models also present risk in terms of consumer protection and the security of the grid.

The Australian Energy Regulator, via the exempt selling framework, regulates the various models with reference to these potential benefits and risks.

Selling Energy – Retail exemptions

The Retail Rules provide for three types of exemption:

  • deemed exemptions;
  • registrable exemptions; and
  • individual exemptions.

An exemption will not always be appropriate: If energy selling is your main business, you are selling to large numbers of customers or selling in a number of states and territories; you will probably need a retailer authorisation.

You are likely to be able to operate under an exemption if you are planning to sell energy:

  • ‘incidentally’ to your main business;
  • as a community service or at cost; or
  • to a defined group of customers at one site. 

Enforcement

There are significant penalties that can be applied to a business if it sells energy without an authorisation or under an exemption.

Last month, subsidiaries of property company Stockland Corporation Ltd paid penalties totalling $100 000 following the issue of five infringement notices by the Australian Energy Regulator.

Further Reading

If you’re considering selling energy, we have a host of additional articles and advice on the subject;

i) State-by-State – What are the different processes for becoming an energy retailer?

ii) Expanding into the New Zealand electricity retail market? The broad contours of the New Zealand system

iii) Five Key Considerations for Prospective Energy Retailers

Contact Us to confidentially discuss your energy business plans.

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Review of the Authorisation and Exemption Framework

The Australian Energy Regulator has published a consultation issue paper titled Retail Authorisation and Exemption Review. Broadly, the Issues Paper considers the changing nature of the energy market, the risks posed by new products and services, and asks whether changes are needed to the Retail Authorisation and Exemption Framework. This is a major consultation that will have long-lasting ramifications for the energy market and consumers.  It builds on the work of the Energy Security Board, the Australian Energy Market Commission (particularly in relation to embedded network regulation) and prior work by the AER.

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