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Wednesday, 17 August 2011
Page: 8476


Ms ROWLAND (Greenway) (16:22): I rise to speak in support of the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. This bill represents the final major step in the national energy market reform program agreed by the Council of Australian Governments in response to their 2002 energy market review.

In my former life I was a legal practitioner in network industries Primarily I was in telecommunications, but I must say that I found few aspects of competition and regulation in network industries more complex than in the gas and electricity segments. I want to take this opportunity to thank and acknowledge Gilbert and Tobin, my former employers, for everything I learnt and their continuing expertise on a group level and as individuals. Their practice is indeed without peer in this area.

In June 2001, the Council of Australian Governments recognised that the effective operation of an open and competitive national energy market would contribute to improved economic performance and would deliver benefits to households, small business and industry, including in regional areas. Very significant and important reform around the economic regulation of energy markets covering electricity and gas transmission and distribution has taken place since that time.

The reform that has occurred includes the establishment of the Ministerial Council on Energy to provide national oversight and coordination of energy policy development and a national energy policy framework to guide future energy policy decision making by jurisdictions and to provide increased policy certainty of energy users and for the energy sector itself. The Australian Energy Market Commission has been established as the maker and administrator of the rules under which electricity and gas distribution and transmission businesses operate. The Australian Energy Regulator, a division of the Australian Competition and Consumer Commission, investigates potential breaches of the rules and is otherwise responsible for the enforcement of the rules.

The focus of earlier reforms has been on the economic regulation of gas and electricity networks in the states and territories participating in the national market. These networks now operate in a national regime, administered by national bodies. This approach has facilitated consistent decision making, and the detailed rules that govern the economic regulation of the energy networks have provided greater certainty to stakeholders in relation to both the regulatory processes and the likely outcomes of those processes. In particular, for businesses operating in more than one jurisdiction, the move to a single rule administrator and rule enforcer responsible for the economic regulation of energy networks has significantly reduced the regulatory burden that was previously faced with dealing with multiple regulators applying sometimes very different regulatory regimes. The reforms with respect to the establishment of a national framework for the economic regulation of the gas and electricity markets in the participating jurisdictions are now complete. The final step that is necessary to realise the vision of a truly national approach to energy regulation is to elevate the non-economic regulation of energy services to the national level, and it is the shift from the jurisdictional based approach to our national approach to the non-economic regulation of energy that is the focus of this bill.

Earlier this year the South Australian parliament passed legislation that establishes the framework for the national regulation of the non-price aspects of gas and electricity retail and distribution activities. Important elements of this framework include the Australian Energy Market Commission as the rule maker with respect to these non-price aspects and the Australian Energy Regulator as the relevant regulator and enforcement body. This government has a central role in facilitating the conferral of relevant powers and functions on these national bodies.

The regulatory package that is created by the South Australian legislation includes the national energy retail law, which provides for rules and regulations to be made under that law which are referred to as the national energy retail rules and the national energy retail regulations. The objective of the national energy retail law is to promote efficient investment in and efficient operation and use of energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and security of supply of energy. These issues are of critical importance to all consumers of energy. The national energy retail law, together with the national energy retail rules, will deliver important outcomes for residential and business consumers alike.

Specifically in relation to residential customers, the national energy retail law and the national energy retail rules provide for standard retail contracts to be established by designated retailers. The designated retailer is obliged to make a standing offer applicable to the customer. The prices associated with a standard offer must be published on the retailer's website. The national energy retail law also sets out the manner in which the standard offer prices may be varied. The national energy retail rules set out model terms and conditions for standard retail contracts, and retailers are required to adopt those model terms and conditions with only those alterations that are permitted or required under law or the rules.

The national energy retail law and rules provide greater scope for the negotiation of contracts between retailers and business customers. For business customers that consume energy at business premises below the upper consumption threshold, the customer and the retailer may negotiate and enter into a market retail contract for the provision of energy to the customer as well as the provision of other services. The rules set out some minimum requirements that the market retail contracts are required to meet to ensure the protection of this particular class of customers. These requirements include that a market retail contract must set out all the tariffs and charges payable by the customers and the circumstances in which the contract will terminate. In order to provide guidance to retailers as to the presentation of standard offer prices and market offer prices, the Australian Energy Regulator is also given the powers under the national energy retail law to make and amend retail pricing information guidelines. The guidelines may specify the manner and form in which details of standing offer prices and market offer prices are to be presented when publishing or advertising those prices. The disclosure regime around prices set up under the national energy retail law is designed to assist small customers to consider and compare standing offer prices and market offer prices offered by retailers.

The national energy retail law also sets out important safeguards for consumers in terms of customer hardship policies. The national energy retail law requires retailers to develop these policies and submit them to the Australian Energy Regulator for approval. The Australian Energy Regulator has the power to direct the retailer to review the policy and make variations in accordance with the requirements it sets out. A retailer is required to vary the policy in accordance with those requirements and to submit it for approval and to publish the policy after it has been approved by the regulator, and it must also maintain and implement their customer hardship policy. The national energy retail law sets out minimum requirements for such a policy, including processes to identify residential customers experiencing payment difficulties as a consequence of hardship, flexible payment options and processes to identify appropriate government concession programs and financial counselling services and to notify hardship customers of their availability. Pursuant to the rules, a retailer will be required to inform a hardship customer of the retailer's customer hardship policy.

The National Energy Retail Law and rules also deal with the important subject of energy marketing. The law provides for the development of rules for, or with respect to, the carrying out of energy marketing activities. The rules set out the minimum information that a retail marketer is required to provide to small customers, such as information that includes all applicable prices, charges, early termination payments and penalties. The rules also provide for the establishment by retailers of a no-contact list, being a list of customers who have indicated they do not wish to be contacted by mail or in person by the retailer.

The relationship between distributors and end users of energy is usefully clarified under the National Energy Retail Law and rules and will become the subject of a consistent regime across the participating jurisdictions. The rules provide certainty to customers in terms of connection to the electricity and gas distribution networks. The rules also contain model terms and conditions that, with permitted variations, will form the deemed standard connection contracts between distributors and customers.

Of relevance to the important issue of security of supply are the provisions in the National Energy Retail Law and rules which establish the retailer-of-last-resort scheme. The approach to dealing with the circumstance in which a retailer is unable to continue to supply energy to its customers is currently the subject of varied approaches across the jurisdictions. The National Energy Retail Law and the rules also set up a retailer-of-last-resort scheme, which will require the Australian Energy Regulator to ensure that at all times there is one default retailer of last resort for each connection point in the case of electricity and for each distribution system in the case of gas. Additional retailers of last resort may also be registered in respect of connection points and distribution systems. The law gives the Australian Energy Regulator important powers to enable appropriate action where the regulator receives notice or otherwise becomes aware of any event, circumstance or matter that it has reason to believe may or will affect the continuity of supply to the customers of a retailer.

To the extent that the relevant jurisdictions enact relevant legislation, the Australian Energy Regulator will have the power under the National Energy Retail Law to develop and make available on the internet a price comparator. The purpose of the price comparator is to assist a small customer to compare the standing offer prices available to that customer and the market offer prices that are generally available to classes of small customers in the relevant jurisdiction.

In relation to large customers, the National Energy Retail Law recognises that it is appropriate to be less prescriptive and to provide more scope for commercial negotiations between large customers and retailers and distributors. However, the framework still provides for adequate oversight of these arrangements. For example, the law provides that a distributor may prepare and submit to the Australian Energy Regulator for approval one or more proposed forms of standing connection contracts applicable to one or more classes of large customers. The Australian Energy Regulator is required to approve a proposed form of standing connection contract if it is satisfied that the terms and conditions of the contract are fair and reasonable and comply with any applicable requirements of the energy laws. On approval, the proposed standard form connection contract becomes the deemed energy regulator approved standard connection contract for the relevant class of large customer or the distributor.

It will be clear from the matters that I have mentioned that the National Energy Retail Law deals with issues that are of importance to all consumers of energy, particularly individual households and small business, including certainty around the supply of energy, the transparency around prices and the terms and conditions of supply by retailers. It will also be apparent that bodies such as the Australian Energy Regulator and the Australian Energy Market Commission are absolutely central to the implementation of a national approach to the retail regulation of energy service providers.

The National Energy Retail Law gives the Australian Energy Regulator an important role in protecting the interests of consumers, particularly in relation to standing offers required to be made available to small customers, including residential customers, approving customer hardship policies and ensuring continuity of supply through the retailer-of-last-resort scheme.

The Australian Energy Market Commission is also given important functions and powers under the National Energy Retail Law, primarily those relating to the making of rules regulating the provision of energy services to customers and the activities of persons involved in the sale and supply of energy to customers. Bringing the price and non-price regulation of all parts of the energy supply chain within the purview of the rules administered by the Australian Energy Market Commission and enforced by the Australian Energy Regulator will reduce regulatory complexity, particularly for service providers operating in multiple jurisdictions in our national energy market. Reducing the regulatory burden and providing greater certainty around the circumstances in which distributors are required to deal with retailers will facilitate heightened levels of competition in the retail market and provide consumers with greater choice.

The Australian Energy Market Amendment (National Energy Retail Law) Bill is an important part of the realisation of a national framework for energy regulation. The oversight of energy regulation by national bodies, in particular the Australian Energy Regulator, whose powers and functions are to be supported by appropriate investigative and enforcement powers, is crucial to the stability and overall performance of the national energy market. I am therefore a strong supporter of this bill.