Regulatory Compliance Update - Australian Energy Regulator

22 June 2018

In earlier posts we discussed the new regulatory compliance requirements of the Australian Energy Regulator called the Power of Choice and the need to appoint an Embedded Network Manager, requirements which came into effect on December 1st, 2017. Whilst the Australian Energy Regulator provided a grace period through until March 30th, 2018 to finalise the compliance for embedded networks, if your network hasn’t finalised its compliance requirements, it is very important that you ensure that the details are registered to avoid the potential for penalties for non-compliance.

For NSW, QLD and SA, the new regulations include updates to the exemption guidelines for embedded networks. This includes the requirement for customers in embedded networks to have access to the Ombudsman Scheme in their state. Currently, customers in embedded networks do not have a right to lodge a complaint with the Energy & Water Ombudsman. From July 1st, 2018, the Ombudsman in each state will progressively update their membership structures to bring embedded networks into the fold. The NSW Ombudsman, EWON, has been working towards this for several months and is close now to releasing their final decision in this matter. Rest assured however, joining the Ombudsman scheme in your state will be compulsory for your and embedded network at some point in 2018. We will continue to update as the Australian Energy Regulator releases more information.

Victorian embedded networks have even bigger compliance hurdles to face before July 1st, 2018!

In late 2017, The Victorian Government implemented the General Exemption Order 2017 (the order), which requires the establishment of a public register of exempt persons. Exempt persons are those conducting activities involving the supply and retailing of electricity who are not licensed electricity retailers or distributors.

The operation of electrical embedded networks is the specific focus of the order. Further detailed information from the Essential Services Commission Vic (ESC) can be found on their website. The supply of electricity needs a Network Exemption and the selling of electricity needs a Retail Exemption.

The ESC has advised Energy On, that the required registrant entity for the embedded network is the “owner or lessee of the wires and other critical network infrastructure necessary for the supply of electricity”. The individual electricity meters are not considered to be infrastructure that is critical to the supply of electricity, so are not included in the definition. As the internal wiring and switchboards are assets that are generally part of the common property, under the order, the Owners Corporation is defined as the required registrant of the network. Commercial arrangements for the operation of the network are not considered as part of the ESC interpretation of the required registrant entity.

For the Retail Exemption, the ESC defines the exempt person in this category as the holder of the electricity account with a Licensed Retailer for the grid supply of electricity to the Parent Meter at the site. This may be the Owners Corporation, or it may be another entity, but the account holder must obtain the Retail Exemption.

An additional requirement of the order is that all exempt persons (network, retail or both) become members of the Energy & Water Ombudsman scheme in Victoria. The deadline for membership is July 1, 2018. Under the current regulatory requirements, customers within embedded networks do not have access to the complaint / dispute resolution process provided by EWOV. The requirement of the order is that the holder of the exemption, either network or retail or both, must become the member of the scheme.

There are fees applied to both joining and ongoing annual membership, as well as to disputes when they are raised with the Ombudsman. Where the exemption holder/s has an Embedded Network Operator (ENO) such as Energy On, managing the network, they will need to provide the Ombudsman with a Deed that appoints the ENO as an agent who will act on your behalf. This is a sensible requirement when generally the customer relationships are handled by the ENO.

There have been considerable delays from the ESC in the finalisation of the details of the order and whilst the June 30 deadline remains in place, it is unlikely that there will be any actions for non-compliance by that date as the Australian Energy Regulator is aware that the delays have placed large administrative burdens on many organisations and for.