The National Energy Retail Law is planned to be a cooperative Commonwealth, State and Territory regime known as the National Energy Customer Framework (Framework). The Framework regulates relationships between energy retailers and distributors and their customers, and associated customer protection measures. The Framework includes the National Energy Retail Law, National Energy Retail Rules and National Energy Retail Regulations. However, not all States and Territories have signed up (details below).
The National Energy Retail Law was first enacted by the South Australian Parliament as the lead jurisdiction. Some other states and territories have adopted the National Energy Retail Law by enacting their own National Energy Retail Law Acts.
The Framework has commenced, and the National Energy Retail Law has been enacted in South Australia, New South Wales, the Australian Capital Territory and Tasmania. We understand that Victoria is expected to enact the National Energy Retail Law and commence the Framework, but we are unsure of when this will occur. Queensland is yet to consider its position, and Western Australia and the Northern Territory will not be enacting the National Energy Retail Law.
The Australian Energy Regulator (AER) is the national energy market regulator established by the Competition and Consumer Act 2010. The AER regulates the retail energy markets in each jurisdiction. The AER’s functions include authorising retailers to sell energy and enforcing compliance with retail legislation. Pursuant to the National Energy Retail Law, any instrument or decision of the AER is valid and has effect from the time of application. As an example, a guideline is an instrument of the AER.
Section 118 of the National Energy Retail Law states that the AER must develop and maintain exempt selling guidelines which provide information about exemptions from the requirement to hold a retailer authorisation and any other matters specified in the Rules.
Just recently, on 3 July 2013, the AER released its final retail exempt selling guideline. The guideline currently applies in New South Wales, South Australia and the Australian Capital Territory. The amendments and additions made to the guideline create new thresholds for exemptions, and new classes of exemptions. All of which may be applicable to any clients who are property developers and investors.
Under the reforms, any person selling energy for use must have either:
- a retailer authorisation, or
- retail exemption.
For the reforms to apply, the energy sales need not be for profit, merely passing on the costs of energy to another person is considered to be a sale. However, there is no sale of energy if the energy costs are included in a fixed charge; for example, if energy costs are included in the rent.
New Deemed Exemption Classes
A deemed exemption is an exemption that applies automatically. A person to whom a deemed exemption applies does not need to apply or register with the AER, however, conditions will apply to the exemption.
- Class D1 has been created for persons selling metered energy to fewer than ten small commercial/retail customers within the limits of a site that they own, occupy or operate. Any person selling energy to 10 or more customers is considered to be a significant operation and should be registered.
- Class D2 – for persons selling metered energy to fewer than ten residential customers within the limits of a site that they own, occupy or operate.
Note: the threshold for deemed exemptions has been reduced from 20 to 10 customers.
Amended Registrable Exemption Classes
A registrable exemption is an exemption which must be registered with the AER and is subject to conditions. Registration occurs by completing the registration form released by the AER on 4 July 2013.
- Class R1 – for persons selling metered energy to ten or more small commercial/retail customers within the limits of a site that they own, occupy or operate. Under this class, there is no longer a requirement that the landlord/tenant relationship be governed by commercial or retail tenancy legislation. Under this class, persons selling energy to 10 or more customers for a given site need to register their exemption, and will need to apply for individual exemptions from 1 January 2015.
- Class R2 – for persons selling metered energy to ten or more residential customers within the limits of a site that they own, occupy or operate. This new exemption means that landlords selling to 10 or more customers will need to register their exemption, however; from 1 January 2015 individual exemptions will need to be applied for.
- Class R5 – for persons selling metered energy to large customers in a site that they own, occupy or operate. For example, in commercial or retail properties such as shopping centres, office buildings, airports and industrial parks.
New Registrable Exemption Classes
- Class R6 – for persons selling metered energy to small customers at a site or premises adjacent to a site that they own, occupy or operate. This Class R6 exemption is only open to current sellers and those who commence selling prior to 1 January 2015. After this date, sellers will need to make an application for an individual exemption.
- Class R7 – for persons selling unmetered energy to small commercial/retail customers at a site that they own, occupy or operate. This Class R7 exemption only applies to current sellers and those who commence selling prior to 1 January 2015. After this date, sub-meters will need to be installed or an application for an individual exemption must be made. Applications for unmetered selling will only be approved in exceptional circumstances. This Class R7 exemption does not apply to landlord/tenant relationships that are covered by tenancy legislation that requires energy sales to be metered.
A retailer authorisation should be applied for where a person is planning to sell energy to a large number of customers, across a number of sites or jurisdictions or sell a large amount of energy. For example, if a company or person currently sells energy to residential customers and plans to also sell energy to small commercial/retail customers in the future, and potentially expand across jurisdictions, this company or person should consider applying for a retailer authorisation.
Authorised retailers are subject to the Retail Law and are required to comply with certain conditions of their authorisation.
A retailer authorisation however may be burdensome and unnecessary where the energy is sold incidentally. For example where an owner purchases energy from a authorised retailer and then on-sells the energy to tenants. In such situations, either a deemed or registrable exemption should apply.