Victorian Essential Services Commission Annual Report 2020-21 – Summary

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On 17 November 2021, the Victorian Essential Services Commission (ESC) released its Annual Report for 2020-21 (the Report). The purpose of the Report is to provide an overview of the previous financial year (ending 20 June 2021), including what they did, how they performed on key goals, and what they plan to do in the future.

Key highlights of 2020-21

There were a number of key issues discussed in the Report:

  • COVID-19 – this had a big impact on the ESC and influenced their activities in a number of areas.   Some key directives they implemented included:         
    • monitoring and reporting on customer and industry data in the energy and water industry to track the impact of the pandemic
    • increasing customer protections from disconnection, and protections for small businesses facing payment difficulties due to restrictions
    • extending submission deadlines / re-setting implementation deadlines for ESC projects
    • amending customer service codes to protect customers experiencing financial stress
    • ensuring engagement on key decisions was moved to virtual setting
  • ‘Getting to fair’ strategy – in August 2021, the “Getting to fair” strategy was released. This was a culmination of several years of work towards breaking down barriers for Victorians in accessing essential services. The Report lists the key objectives as:
    • improving how essential services communicate with customers so they understand their rights
    • empowering consumers to make choices and seek help when they need it
    • identifying consumers who need help early, and ensuring support is flexible and tailored.
  • Compliance and Enforcement – the ESC took a three-pronged approach in this area:
    • Empowering customers via an information campaign, publishing 11 monthly reports, and conducting 5 education sessions.
    • Promoting compliance by publishing new 9 guidelines, and holding workshops on debt collection, embedded network guidance and about concessions and utility relief grants.
    • Taking action by issuing penalty notices totalling $2.515 million to four Victorian retailers for alleged breaches of energy rules.
  • Electricity Pricing – the ESC was involved in electricity pricing in the following ways:
    • Victorian Default Offer – the ESC sets the Victorian default offer each year, which acts as a price cap for electricity supplied to customers in embedded networks.
      • From 1 January 2021, the price was set at around 10% less for households and 14% less for businesses, compared to the previous year (mainly due to lower forecasts for the cost of wholesale activity).
      • From Sept – Dec 2021, the price was slightly increased, due to changes to network tariffs that came into effect on 1 July 2021.
    • Minimum feed-in tariff (ie. the tariff the retailer must pay a customer who feeds their solar power back into the grid) – the formula for these tariffs mainly derives from legislation.  The ESC introduced a requirement that retailers must inform customers about any price change to feed-in tariffs at least 5 business days prior.
  • Public Information Campaign – from 2019-21 the ESC engaged in public information campaigns (“It’s your energy Victoria”) to make consumers aware of a series of changes in the industry. The content covered new rules regarding payment difficulty framework, best offer rule, Victorian default offer and new rules for energy contracts.  Due to COVID-19 impact, a planned roadshow was converted to other mediums including radio, newspapers, online and television marketing.
  • Stakeholder engagement – the report outlined various steps the ESC took to embrace and promote engagement with the community and stakeholders.

Performance and Strategic Goals

Strategic Goals

The Report identified the strategic goals of the ESC and how these were met during 2020-21.  In pursuance of these goals, the ESC undertook various activities in the following areas:

  • Energy (total cost of energy team was $14.30 million)
  • Water (total cost of water team was $3.64 million)
  • Local Government (total cost of local government team was $1.12 million)
  • Transport (total cost of transport team was $3.11 million)
  • Victorian Energy Upgrades (total cost of Victorian Energy Upgrades team was $7.78 million)
  • Communications and Engagement (total cost not specified)

In each category, the Report described the specific objectives of the previous year, how they were met, a summary of the key issues that impacted their work, the total costs involved, and the future objectives for 2021-22.

General Strategy

More generally, the Report also discussed three year ESC Strategy Plan (“Our Strategy 2021–24”), which was updated in 2021 to adjust priorities in the changing landscape. Four specific goals were identified to address the factors expected to impact the ESC in coming years, namely:

  • anticipated legislative reform in the regulatory space;
  • effect of the COVID-19 pandemic;
  • climate change and extreme weather putting greater demands on infrastructure;
  • effective and appropriate enforcement action becoming more of a focus;
  • increasing use of technology and data, and related privacy considerations; and
  • understanding their role in relation to vulnerable consumers.

ESC Operations

The Report provided a detailed breakdown of the operation of the organisation, including workforce data (staff numbers, age / gender breakdown, classification and salary information), employment matters (eg. training, recruitment, workforce planning) and other policies (covering diversity and inclusion, and health and safety).

Corporate Governance

The Report outlined its statutory responsibilities under the Essential Services Commission Act 2001 (and other miscellaneous pieces of legislation).  It described how these were carried out, including Commissioners’ board meetings to oversee corporate governance, audit and risk committee meetings to assist the board in fulfilling responsibilities, and agreements with various government entities (by way of Memorandum of Understanding) to assist in carrying out activities.

Finances

The finances of the organisation were summarised, covering income, expenses, and assets and liabilities.  The overall position was that the ESC achieved an operating surplus of $0.278 million, which was $0.129 million higher than the previous financial year of 2019–20. Full financial statements were also included.

Other Topics

The Report contained a number of other inclusions (often statutory requirements) namely:

  • Performance against Output Measures – a report on the ESC’s performance against several measures that relate to Budget Paper Number 3 Service Delivery (BP3)
  • Licence Fee Revenue – a list of licence fee revenue by type (energy, gas, water)
  • Financial statements – detailed documents (approx. 30 pages) of explanatory and required information about the ESC’s finances
  • Various Appendices regarding:
    • Disclosures
    • Asset Management Accountability Framework maturity assessment (“a devolved accountability model of asset management that requires compliance with 41 mandatory requirements”)
    • Ministerial statement of expectations (a table showing progress against the statement of expectations issued by the Assistant Treasurer)
    • Appeals, notices and determinations in 2020–21
    • Integrity and accountability (information about Public Interest and Disclosure Act 2012, reporting procedures, and Freedom of Information)

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