Those Who Wish to Provide Hard Copies by Post May Do So by Addressing Their Submissions To

Submissions are invited on this consultation paper. Electronic submissions are preferred and can be sent to the COAG Energy Council Secretariat at .

Those who wish to provide hard copies by post may do so by addressing their submissions to:

COAG Energy Council Secretariat

GPO Box 9839

Canberra ACT 2601

All submissions will be published on the Council website (www.scer.gov.au) unless stakeholders have clearly indicated that a submission should remain confidential, either in whole or in part.

Please note that this paper does not provide legal advice about any of the laws discussed in it, and it should not be relied on for any purpose. It is intended as a consultation paper only. It does not reflect the final views of officials or Council policy.

The Energy Market Reform Working Group (EMRWG) consists of officials from the state, territory and Commonwealth agencies with responsibility for energy policy. It operates under the COAG Energy Council framework.

Contents

Introduction 4

Purpose 4

Scope 5

Why conduct this consultation now? 5

Making a submission 5

Retail Frameworks 6

Other jurisdictional frameworks 6

Objectives of retail reporting 7

Scope of retail reporting 7

Overview of current retail reporting frameworks 9

COAG Energy Council commissioned reports 9

Reports as part of the National Energy Retail Law and Rules 10

Jurisdictional requirements 12

Australian Energy Market Operator (AEMO) 14

Ombudsmen 14

Retail price reporting 15

Prices of generally available offers 15

Retail energy prices paid by consumers 16

Pricing Structures 16

Price reporting methodology 16

Conclusion 17

2

Introduction

Jurisdictions have historically been responsible for regulating retail energy prices in Australia. The Australian Energy Market Agreement (AEMA) commits jurisdictions to phase out the exercise of price regulation for electricity and natural gas where effective retail competition can be demonstrated.

Previous Competition Reviews by the Australian Energy Market Commission (AEMC) have found that energy retail competition is effective in South Australia, New South Wales, Victoria and South East Queensland. Competition is generally more effective in electricity than in gas.

Consistent with the AEMA, the following jurisdictions have deregulated or plan to deregulate retail electricity prices:

·  Victoria: deregulated electricity prices in 2009;

·  South Australia: electricity prices deregulated in February 2013;

·  New South Wales: electricity prices deregulated in July 2014; and

·  South East Queensland: the former Queensland Government passed amendments to the Electricity Act 1994 to deregulate retail electricity prices in South East Queensland from 1 July 2015.

Gas prices are deregulated in all jurisdictions, other than New South Wales and Western Australia.

Price reporting forms an integral role in the monitoring of market performance and has traditionally been done at a jurisdictional level with no defined national price reporting framework. Given the above commitment by the COAG Energy Council (the Council), the commitment by jurisdictions to deregulate retail energy prices where effective retail competition exists and the adoption of the National Energy Customer Framework (NECF) by most jurisdictions, it is considered an appropriate time to review the existing retail energy reporting frameworks to ascertain whether these are still designed appropriately for the current retail market within the National Electricity Market (NEM).

It is important to identify if any adjustments are needed to the current retail reporting arrangements, including price reporting, to ensure it is appropriate and continues to perform the role for which it is intended, consistent with the national energy retail objective of promoting efficient investment in, 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.

This may involve changes to the current price reporting done on a jurisdictional level or the adoption of a national approach whereby reporting is done by a national body. It is acknowledged that the latter may have resource and cost implications which need to be identified, and as part of the development process, quantified. It is further noted that consideration will need to be given to the timing of any implementation, and the lead time required, as part of that process.

Any proposed response to the issues raised as part of this consultation process, including any proposed changes to the current retail framework, will be done with reference to other COAG Energy Council work programs.

Purpose

To seek stakeholder comment on the most appropriate retail energy reporting framework in light of the changed environment where most jurisdictions have adopted the NECF and have committed to deregulating retail energy prices.

Scope

This consultation paper reviews the current retail reporting regime and seeks stakeholder input into:

·  Objectives for information and reporting in regard to retail energy markets;

·  Whether existing information and reporting is adequate, and if not, how the gaps could be addressed cost-effectively;

·  Whether it is necessary to consolidate or streamline existing information and reporting requirements, and/or expand other areas of reporting.

It is intended that this consultation cover the reporting regimes which currently exist across the NEM, in retail environments where prices are both regulated and unregulated, namely Queensland, New South Wales, Victoria, the Australian Capital Territory, Tasmania and South Australia.

However, it is noted that some information and reporting requirements may only apply to those jurisdictions that have applied the NECF.

Why conduct this consultation now?

Under the National Energy Retail Law (NERL), which forms part of the NECF, the AER is responsible for reporting on retailer market performance for those jurisdictions that have adopted the NECF. The NERL commenced in the Australian Capital Territory and Tasmania on 1 July 2012, in South Australia on 1 February 2013 and in New South Wales on 1 July 2013. Queensland is expected to commence the NECF from 1 July 2015. Victoria intends to consider the NECF once it has addressed specific issues.

While the NECF was developed with deregulated retail energy prices in mind, at the time of its development Victoria was the only national energy market jurisdiction with completely deregulated retail energy prices. Jurisdictions, other than New South Wales and South Australia, had deregulated retail gas prices at the time of NECF development. Since the commencement of the NECF, South Australia has deregulated retail electricity and gas prices and NSW has deregulated retail electricity prices. The former Queensland Government passed amendments to the Electricity Act to deregulate retail electricity prices in South East Queensland from 1 July 2015.

With these developments, the overarching commitment of jurisdictions to retail energy price deregulation as part of their agreement to the AEMA, and the transfer of regulatory powers nationally to the AER as part of the NECF, it is considered an appropriate time to undertake a comprehensive review of current retail reporting frameworks to ensure they continue to facilitate a competitive and transparent retail energy market in which consumers can confidently participate.

Making a submission

Stakeholders are invited to provide written submissions on the consultation paper by close of business
Friday 29 May 2015.

All stakeholder submissions will be published on the Council website unless stakeholders have clearly indicated that a submission should remain confidential, either in whole or in part. Electronic submissions are preferred and can be sent to the COAG Energy Council Secretariat at .

Those who wish to provide hard copies by post may do so by addressing their submissions to:

COAG Energy Council Secretariat
GPO Box 9839
CANBERRA ACT 2601

Should you have any queries, please contact the COAG Energy Council Secretariat at .

Retail Frameworks

National Energy Customer Framework (NECF)

The NECF regulates the sale and supply of energy to retail customers. The NECF comprises the NERL, the National Energy Retail Regulations and the National Energy Retail Rules (NERR). The aim of the framework is to promote the National Energy Retail Objective:

“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.”

The NECF also includes Chapter 5A of the National Electricity Rules and Part 12A of the National Gas Rules, which cover customer connections.

The NECF has been adopted in the Australian Capital Territory, Tasmania, South Australia and New South Wales. It is expected Queensland will implement it this year and Victoria is also anticipated to consider the framework pending the resolution of specific issues.

The NERL and NERR focus on the rights and obligations of retailers and consumers and include extensive energy market specific customer protections which are intended to exist in parallel with the more general Australian Consumer Law and Statebased consumer protection regimes. Collectively, the framework seeks to promote competition by providing a single set of national rules to which retailers are required to comply, rather than state specific laws, thereby reducing the regulatory cost associated with operating across jurisdictions. The NECF also contains a comprehensive customer protection regime to ensure consumers have adequate information to engage confidently in the market and comprehensive protections should they encounter financial hardship.

The AER regulates energy markets and networks. In those jurisdictions that have commenced the NERL, the AER’s role includes regulation of the jurisdiction’s retail energy markets. Specifically, this role includes:

·  Reporting on the performance of energy businesses and the market more generally, including with respect to customer complaints, rates of disconnection for non-payment, the adoption of payment plans and energy affordability of small customer (this function is further detailed below);

·  Monitoring and reporting on energy businesses’ compliance with their regulatory obligations;

·  Assessing and issuing retailer authorisations and exemptions under the NERL, as appropriate;

·  Approving retailers’ hardship policies, as required under the NERL, to apply to those customers facing financial hardship; and

·  Making available a web-based price comparator service for which retailers are obliged to provide up to date information to ensure energy customers have access to the latest contract offers to enable them to select the offer which best meets their individual requirements.

Other jurisdictional frameworks

In jurisdictions where the NECF is not currently in place, retailers’ and consumers’ rights and obligations are governed by local legislation and industry-based Codes. The regulation of these markets remains with their respective State-based jurisdictional regulators, namely the Essential Services Commission of Victoria (ESCV) and the Queensland Competition Authority (QCA).

In the case of Victoria, where retail energy prices were deregulated in 2009, in addition to its regulatory role, the ESCV continues to report on standing and market contract prices as well as flexible pricing options, the latter available to Victorian retail electricity customers since September 2013. The QCA is currently still responsible for setting and publishing retail energy standing offer prices.

Objectives of retail reporting

Retail reporting involves the reporting on various retail market indicators which, collectively, provide insight into the performance of the retail market. These include price as well as other non-price indicators such as customer numbers, the rate of customer switching, the types of retail contracts available as well as the market share of various retailers and the proportion of customers on market contracts.

The objective of retail energy reporting is to provide key information required by stakeholders to make decisions in the retail energy market. The following defines the decisions of various stakeholders that retail reporting seeks to support:

·  For policy makers, retail reporting provides an important measure of the effectiveness of retail energy market competition using a range of competition factors which then informs any policy or legislative response that may be required to ensure the national energy objectives are achieved.

·  For regulators, reporting helps to point out where the regulators’ attention is required to address aspects of poorer performance by individual retailers or across the retail industry. This provides confidence to market participants and consumers that their long term interests are protected through regulators being informed.

·  For retailers in a competitive market, the transparency of retail reporting promotes greater competition between retailers and encourages retailers and generators to strive to identify areas for improvement in their business practices and set retail prices in order to retain customers and gain market share.

·  For consumers, retail reporting provides historical information concerning pricing and performance of retailers. This transparency informs and educates consumers so that they have more knowledge in finding the best contracts available to them and hence can engage more confidently in the retail market.

·  For consumer groups, this reporting provides historical information regarding the impact of aspects of the retail market on its stakeholders, enabling them to ensure consumer interests are accurately represented and where relevant, inform lobbying for regulatory change.

Consultation questions:

Is the objective of retail energy reporting adequately defined?

Are all the stakeholder decisions which require support from retail energy reporting covered?

Scope of retail reporting

The scope of reporting that needs to carried out in order to achieve the object of retail energy reporting for major stakeholder classes (as outlined in the section above) should comprise:

·  Retail Competition – The reporting of the number of energy retailers operating in each jurisdiction retailing electricity and gas and their respective market share (including by the largest retailers and second-tier retailers) helps to inform stakeholders of the state of competition and its development in each jurisdiction.

·  Customer Numbers – Reporting on electricity and gas customer numbers is essential to inform stakeholders of trends in developing retail energy market competition and the level of market concentration.

·  Contract Types – Reporting on the number and percentage of small electricity and gas customers on standing contracts or market contracts is a measure which shows the level of customer engagement.

·  Retail Prices – Retail energy price monitoring and reporting is essential for many stakeholders to make sound decisions within the retail energy market. It provides information to help State and territory governments assess the state of competition in each respective jurisdiction to inform policy making and regulatory arrangements on retail energy pricing. Furthermore, customers require retail price transparency to make informed decisions and increased transparency will in turn promote greater competition between retailers and encourage retailers and generators to strive to keep prices as low as possible in order to retain customers and gain market share.