Release of New AER Life Support Registration Guide

Release of New AER Life Support Registration Guide

AU Energy Compliance

AER has just released a new Life Support Registration Guide (the Guide) ahead of the commencement of the new Life Support National Energy Retail Rules (NERR) on the 1 February 2019. This update summaries the new registration guide and what retailers need to do to comply with it.

By Dr Drew Donnelly, Compliance Quarter. 

1.The New Life Support Rules

The new rules:

  • provide customers with life support protections from the time they inform their retailer or distributor that they rely on life support equipment until they are deregistered;
  • require the registration process owner (the retailer or distributor contacted by the customer) to:

* notify customers of their rights and obligations under the life support rules;

* follow a prescribed process for obtaining medical confirmation of customer eligibility to be on the life support register;

* follow a prescribed process for the removal of a customer from the register where medical confirmation is not provided;

* establish a clear process to enable either the retailer or distributor to deregister the premises if the customer advises that life support equipment is no longer required.

  1. The Guide

The Guide sets out the different steps that retailers and distributors must take at each stage of the process in accordance with the new rules, including the customer notification process, medical confirmation, de-registration and information sharing and record-keeping requirements. It also sets out the AER’s approach to compliance and enforcement with respect to the new life support rules. This includes that:

  • with the commencement of the new rules on 1 February 2019, businesses must have policies, systems and procedures in place for registering and deregistering premises requiring life support equipment. This includes maintaining accurate and up to date registers and ensuring deregistrations are carried out in accordance with the NERR;
  • a failure to meet life support obligations is a civil penalty provision under the NERR which means court-ordered penalties of up to $100 000 for a corporation and up to $20 000 for individuals per contravention. The AER also has the power to issue infringement notices;
  • the self-reporting compliance framework requires retailers and distributors to report possible breaches of the Retail Law and Retail Rules. The life support obligations are classified as immediate and must be reported within two business days of the business identifying them, given the potential for serious customer harm.
  1. What about Embedded Networks?

Authorised Retailers who supply to customers in embedded networks will be subject to the new life support rules just like any other authorised retailer. The new rules do not apply to embedded network operators operating solely under network and/or retail exemption

The life support obligations for exemption holders are provided in the AER Electricity NSP Registration Exemption Guideline (Network Guideline) and the AER Retail Exempt Selling Guideline (Exempt Selling Guideline), respectively. These include requirements not to disconnect customers who rely on life support equipment (without making alternative arrangements for the customers safety) and the requirement to ensure that parent and child connection point retailers are informed of customers with life support needs.

Next Steps

  • Ensure that internal processes are updated as recommended in the Registration Guide to manage registration processes;
  • Conduct a compliance risk assessment with respect to the new rules and submit to the organisations Board for consideration.

Read the Guide at https://www.aer.gov.au/system/files/1482_AER_Life%20Support%20Guide_FA_WEB%20%28002%29.pdf.

 

 

Are you paying lip service to your customer hardship obligations?

Are you paying lip service to your customer hardship obligations?

AU Energy Compliance

Under the National Energy Retail Law (see sections 43-51) and associated Rules (see rules 31 and 71-73), energy retailers have a range of obligations which exist to protect customers facing financial difficulties. This means, among other things, that customers following agreed repayment plans or participating in hardship programs cannot be disconnected.

customer hardship obligations

By Dr Drew Donnelly, Compliance Quarter.

Last year, AER’s 2016-17 Annual Report on Compliance & Performance of the Retail Energy Market and 2017 Hardship Review revealed some problematic trends in relation to customers facing hardship, including:

  1. Increased debt levels for customers;
  2. Low numbers of customers receiving hardship assistance;
  3. Fewer customers completing hardship programs;
  4. Increased overall electricity disconnections.

In response to these concerns, the Australian Energy Regulator (AER) has just submitted a rule change request to the Australian Energy Market Commission (AEMC).[1]Today we look at the proposed rule change and what this could mean for retailers.

The Rule Change Proposal

The proposed rule change would empower the AER to create a ‘Hardship Guideline’. This would sit alongside the other Guidelines (such as the Retail Authorisation Guideline and the Compliance Procedures and Guidelines) in setting out the obligations of retailers in operational detail. AER proposes a Hardship Guideline specifically in response to:

  1. Customers have not been receiving sufficient assistance with managing their energy service.[2] Last year, through the Hardship Review, AER noted that there is no consistent method used by retailers for identifying customers in need of hardship assistance. While some retailers have sophisticated processes such as predictive modelling, others rely on customers missing a certain number of scheduled bill payments before they are referred to a hardship program. Overall, policies are too general and do not commit the retailer to act in a certain way;
  2. Customers are unclear about their rights and entitlements.[3] AER has observed from its review that often hardship policies do not contain reference to specific statements as to how a retailer will act or respond, or what assistance a customer is entitled to by law;
  3. Through compliance audits, AER found that it was difficult to determine how and whether retailers were meeting their hardship obligations under the Retail Law and Rules.[4] Many retailers simply had no idea how they were applying their own policy.

Through developing a Hardship Guideline AER would seek to create a single reference for customer hardship obligations. It would create more consistency across hardship policies and the assistance that is provided to customers. It is also envisaged that a Hardship Guideline would make it easier for AER to monitor and enforce the hardship obligations.

The process from here

AEMC is likely to initiate this rule change request. Once it has done so it will release a consultation paper to receive public submissions on the proposed rule change.

Note, if the rule change is completed it will still be up to AER to develop the content of the Hardship Guideline. It will only do so after consultation.

In the meantime, if you would like any assistance in ensuring compliance with your existing customer hardship obligations and developing hardship policies, please get in contact with us.

[1] AEMC is the public body responsible for consulting on and making changes to energy rules. See https://www.aemc.gov.au/rule-changes/strengthening-protections-customers-hardship.

[2] See AER’s Request for rule change – strengthening protections in the National Energy Retail Rules for customers in financial hardship, p10.

[3] Ibid., p11.

[4] Ibid., p9.

Distributor pays $60,000 penalty for alleged breaches: how to ensure your energy business is meeting its c

Distributor pays $60,000 penalty for alleged breaches: how to ensure your energy business is meeting its c

AU Energy Compliance

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.
life support obligations
Photo by Setu Anand on Unsplash

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.

  1. 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.

 

  1. 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.

 

  1. 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.

  1. 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.

  1. What actions can you take to ensure that you fulfil your life support obligations?

Energex, under an undertaking with AER, has already committed to:

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.

Who has Life Support Obligations in an Embedded Network?

AU Energy Compliance

As part of the ‘Power of Choice’ reforms, on 1 December 2017, the life support notification obligations for embedded networks were updated. Life support notification obligations ensure that those capable of disconnecting electricity supply (i.e. retailers and distributors) are aware of customer life support needs (such as the connection of a kidney dialysis machine or a ventilator).

In today’s article, we explain what the life support obligations in embedded networks are and why it is essential that all businesses involved with an embedded network understand the obligations.

life support obligations
Photo by Hush Naidoo on Unsplash
By Dr Drew Donnelly, Compliance Quarter.

Background to Life Support Obligations

In an embedded network there may be only one entity directly involved in energy supply. That is, there might be one business which operates the embedded network (under a network exemption), sells energy to off-market customers (as an exempt seller or with a retail authorisation), and manages customers that wish to go ‘on’ and ‘off’ market (the embedded network manager). But, often there will be different actors performing each function, or contractors providing some of the services. Where many actors are involved, this can lead to confusion, for both businesses and customers, as to who is responsible for what, including life support obligations.

Furthermore, the ‘Power of Choice’ reforms, which are now fully in effect (as of 1 December 2017), could be seen as introducing new risks. First, it is possible that there will be more customers switching energy suppliers, increasing the amount of customer information transferred and perhaps increasing the risk that information gets lost. Second, the ‘Competition in Metering’ rule change means that, for the first time, retailers will be able to arrange for remote de-energisation through the Metering Co-ordinator[1]. Before December 1 2017, it was only the Local Network Service Provider for the embedded network as a whole, or the embedded network operator themselves that had the ability to disconnect an embedded network customer. This means that it is now crucial, that another market participant (the retailer of an embedded network customer), is aware of life support requirements.

Regulatory Response

When regulators were considering how to deal with life support requirements in light of the ‘Power of Choice’ reforms, it was determined that the embedded network operator would have notification obligations for life support customers (i.e. the obligation to inform retailers of the customer’s electricity-dependent life support needs). This responsibility was not placed on the embedded network manager (ENM), as not every embedded network necessarily has an ENM[2].  

As of 1 December 2017, condition 10 of the network exemption guideline specifies:

Where notified by a customer (‘life support customer’) of the existence of a requirement to maintain supply for life support equipment, the exempt embedded network service provider must, without undue delay, promptly notify the parent connection point retailer of the existence of a life support requirement in accordance with the reasonable requirements of the parent connection point retailer.

In addition, the exempt embedded network service provider must, without undue delay, promptly notify the child connection point retailer when they are informed of life support requirements at a child connection point[3].

In other words, on notification, an embedded network operator must inform their own retailer and the retailer of the customer (where the customer is ‘on-market’) of these requirements.

In addition to condition 10, condition 11 provides that:

An exempt embedded network service provider must not disconnect supply to a life support customer without making arrangements for the safety of a life support customer.

A similar requirement applies under the exempt selling guideline, condition 10:

An exempt person must not disconnect or cease energy supply to an exempt customer’s premises where a person residing at the exempt customer’s premises requires life support equipment that depends on energy for its operation.[4]

The life support obligations of retailers and distributors, including the rules relating to supply interruption and keeping a register of life support information are set out in Part 7 of the National Energy Retail Rules. Note, the Australian Energy Market Commission has recently consulted on a draft rule change that would strengthen life support protections by requiring distributors and retailers to implement life support protections more quickly.[5]

What does this mean for Embedded Network Managers?

While ENMs may not have the formal obligation for life support notification, it is essential that ENMs are familiar with these requirements for two reasons. First, familiarity with the exemption guidelines (including life support obligations) is a requirement of ENM accreditation. Second, customers may not always know who to talk to about life support requirements. In light of this, it is important that all ENMs have in place a procedure for ensuring that life support information they become aware of gets to the right parties.

If you think we could be of service in helping you meet any of your embedded network regulatory obligations, please get in touch.

 

 

[1] See p61, Rule Determination: National Electricity Amendment (Embedded Networks) Rule 2015

[2] See p40, Rule Determination: National Electricity Amendment (Embedded Networks) Rule 2015

[3] See the Electricity Network Service Provider Registration Exemption Guideline at https://www.aer.gov.au/system/files/AER%20electricity%20NSP%20Registration%20Exemption%20Guideline%20-%20Version%205%20-%201%20December%202016_1.pdf. Similar notification obligations are also contained in the Retail Exempt Selling Guideline, condition 16.

[4] See the Retail Exempt Selling Guideline at https://www.aer.gov.au/retail-markets/retail-guidelines-reviews/retail-exempt-selling-guideline-march-2016.

[5] To read more go to http://www.aemc.gov.au/Rule-Changes/Strengthening-protections-for-customers-requiring.