Regulation of electricity utilities – sales of powerApproval to sell power
What authorisations are required for the sale of power to customers and which authorities grant such approvals?
Retailers must obtain an authorisation (or licence in jurisdictions that have not adopted the NECF) unless an exemption applies. An authorisation will apply in all NECF participating jurisdictions as the AER does not have the power to limit the jurisdiction where the retailer can operate.
The AER is responsible for granting and monitoring compliance with authorisations and the NECF. In participating jurisdictions that have not implemented the NECF, the relevant state regulator is responsible. A prospective retailer must apply to the AER or the applicable state regulator for an authorisation or licence (as the case may be).Power sales tariffs
Is there any tariff or other regulation regarding power sales?
There are two classes of mass market customer contracts: standing retail contracts and market retail contracts.
Standing retail contracts
Standing retail contracts are basic contracts for residential and certain small business customers who do not negotiate a market retail contract. In some states (such as Tasmania) the designated retailers are obliged to offer standing retail contracts at regulated prices set by an independent energy regulator. In Victoria, although all retailers must offer standing retail contracts, standing offer rates are determined by the retailer and not the regulator.
The provisions of standing retail contracts are more regulated than market retail contracts and the rights of retailers to vary the terms or rates are also limited by legislation.
Market retail contracts
Market retail contracts are negotiated between the customer and the retailer. The prices are set by the retailer not the regulator. Market retail contracts must include the minimum terms and conditions prescribed by applicable law.
All jurisdictions participating in the NEM have full retail contestability.
Prices for the retail supply of electricity have been deregulated in South Australia, Victoria and New South Wales. Market monitoring, in place of retail price regulation, commenced in southeast Queensland on 1 July 2016.Rates for wholesale of power
Who determines the rates for sales of wholesale power and what standard does that entity apply?
See the response to question 2 under the subheading ‘Operation of the NEM’.Public service obligations
To what extent are electricity utilities that sell power subject to public service obligations?
The designated retailer (being the local area retailer, where there is no connection or the financially responsible retailer, where there is an existing connection) must offer to supply electricity to small customers at the standing offer prices and under the retailer’s standing retail contract. Under the NECF there is also a retailer of last resort scheme, which provides for the continuity of supply to customers of a failed retailer by the retailer of last resort appointed by the AER.
Under the NECF, retailers are required to develop and implement a customer hardship policy for customers experiencing payment difficulties caused by hardship to assist these customers to pay their energy bills. These policies must be approved by the AER.