The Essential Update

National Energy Customer Framework

Since 2005, there has been significant progress in the development of a national energy regulatory framework, under the oversight of the Ministerial Council on Energy (MCE).  The Australian Energy Market Commission has responsibility for rule making under this framework, while the Australian Energy Regulator (AER) acts as the regulator in accordance with the rules.

Amendments to the National Electricity Law, and a new National Gas Law, each with associated Rules, have effected the transfer of economic regulation of energy transmission and distribution to the new national governance arrangements.  Thus, from 1 July 2008, the AER assumed from the Commission the major economic regulatory role in relation to the electricity and gas distribution networks operated by ETSA Utilities and Envestra respectively.

Development of a National Energy Customer Framework (NECF) for regulation of the supply of electricity and gas to retail customers is proceeding more slowly. In South Australia, the current State based energy retail regulatory regime is administered by the Commission, but under the national framework such a role would be vested in the AER. 

The NECF will require significant complementary changes to State-based legislation and associated regulatory arrangements (including the Commission’s various Codes and licences that apply to retail and distribution entities).  Furthermore, it contains many of the key consumer protection provisions.

Key policy areas underlying the NECF include:

  • the nature of the customer/retailer and customer/distributor contractual models;
  • supply of energy to retail customers (including an obligation to offer supply to small customers, and a hardship policy regime);
  • provision of distribution services to customers;
  • managing the arrangements between distributors and retailers in the supply of energy to customers;
  • retailer authorisations; and
  • enforcement and compliance issues.

During 2009, the Senior Committee of Officials of the MCE engaged in extensive consultation on draft legislation and rules for the NECF; a second exposure draft of the NECF was released in late November 2009.  At its December 2009 meeting the MCE agreed that jurisdictions would introduce the NECF progressively over the 2 year period beginning July 2011, although transitional arrangements would be required and implementation is expected to be on an incremental basis. 

The Commission has made a submission regarding the second exposure draft of the NECF to the Senior Committee of Officials of the MCE.  The submission was developed in consultation with the Energy Industry Ombudsman of SA, the SA Council of Social Services, Uniting Care Wesley Adelaide and COTA (Seniors Voice South Australia).

The Commission’s submission:

  1. recommended that various customer protections currently in place in South Australia be retained or strengthened in the national framework (particularly in relation to hardship customers and disconnection)
  2. provided comments on various proposed definitions and provisions that the Commission considered may be difficult to apply in practice
  3. provided recommendations on how various processes established under the customer retail contract provisions could be managed more appropriately
  4. advised against the NECF imposing any direct obligations on customers and recommended that customer behaviours be indirectly controlled by imposing rights and obligations on retailers