Verified trust and accountability regulatory approach to small-scale networks

Status

Current status is Final

Further info

Regulatory Reporting Requirements for Small-scale Networks – Guideline No. 5

The Regulatory Reporting Requirements for Small-scale Networks - Guideline No. 5 (Guideline) has been developed to support the implementation of the VTA regulatory approach. The Guideline contains annual reporting requirements for all small-scale networks licensees: water, community wastewater management systems, electricity and gas.

A key aspect of the VTA approach is the classification of a licensee as either a Category A or Category B licensee based on its compliance record and the sustainability of its services. A licensee’s categorisation will dictate its annual reporting requirements. The Guideline has been developed to consolidate all annual reporting requirements for small-scale networks. 

The Guideline will come into effect on 1 July 2022, with annual reports due by 31 August 2022. 

Additionally, from 1 July 2022 the following Guidelines will no longer apply to small-scale networks: 

• Water Guideline No. 1 – Compliance and Reporting (will apply only to SA Water) 
• Electricity Guideline No. 4 – Compliance systems and reporting (will only apply to SAPN, transmission, system control, Australian Gas Networks, and generators), and
• Water Guideline No. 3 – Information requirements for minor and intermediate retailers (will not apply to any entities but will stay on the Commission’s website for reference).
  

Background

The Commission conducted the Inquiry into regulatory arrangements for small-scale and off-grid water, sewerage and energy services (Inquiry) to identify the potential for enhancements and refinements to the nature and scope of its existing economic regulatory framework. In doing so, its primary objective was to protect South Australian consumers’ long-term interests with respect to the price, quality and reliability of essential services.

The Commission considered this Inquiry necessary and desirable to ensure that the regulatory framework it applies remains consistent with its primary statutory objective. It also considered the Inquiry important to ensure regulation of small-scale networks is proportionate and responsive to recent and emerging issues. Those issues can relate to changing technological, operational, environmental or other factors impacting the delivery of water and sewerage retail services, and the sale and/or supply of electricity and gas services to South Australians through small-scale networks.

The Commission released the Inquiry’s Final Report in 2021, which outlines the changes to the Commission’s regulatory approach. As well as accounting for existing compliance obligations, the changes are designed to place more transparency and emphasis on licensed small-scale networks providing assurance to their customers and the Commission, that the services they provide are sustainable over the medium to longer term.

This will occur through the Commission adopting a verified trust and accountability (VTA) regulatory approach to small-scale networks, as well as requiring all small-scale network licensees to become members of the Energy and Water Ombudsman (SA) Limited scheme. 

The approach has been informed by submissions to the August 2020 Draft Inquiry Report. It will formally begin 1 July 2022 after an implementation phase. During this implementation phase, the Commission will work with licensees to produce baseline data sets with which the Commission will categorise each licensee. 

Categorisation

The categorisation of licensees forms part of introducing the VTA approach. The Commission will assess each licensee on compliance and sustainability performance and place it in one of two categories: 

• Category A: Licensees considered trusted to competently run their networks with less prescriptive regulatory oversight. Category A licensees benefit from reduced regulatory reporting. 
• Category B: Licensees where there are concerns regarding network performance, with respect to either compliance, medium to long-term service sustainability, or both – and there does not appear to be a credible, measurable remediation strategy. This does not imply or mean that the licensee’s operation is unsafe but indicates that customers are facing a higher level of service risk than appropriate. 
  

The Commission will work with and monitor Category B licensees as they develop and implement remediation strategies, with the goal of future reassessment as Category A. 

The results of the assessment for each licensed operator will be publicly available. This ensures customers and licensees have transparency regarding the outcome of the assessment.

Classification of licensees may change, depending on the licensee’s performance over time.

The fact sheet outlines the methodology used to categorise licensees.

Engagement and collaboration timeline 

¹ Dates are indicative and may vary for individual licensees

End

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