Corporate Verified trust and accountability regulatory approach to small-scale networks

  • Project Released: 22 Oct 2021
  • Project Closes: Jun 2022
  • Contact: Ashley Harbutt

Overview

The Commission is adopting a verified trust and accountability (VTA) regulatory approach to the way it regulates small-scale and off-grid water, sewerage and energy services in South Australia. The VTA approach provides a targeted, flexible approach to regulation. This is to ensure that the regulatory frameworks it applies under industry regulation Acts is consistent with its primary statutory objective, and is proportionate and responsive to recent and emerging issues.

The new approach is detailed in the Commission’s Final Report of its Inquiry into regulatory arrangements for small-scale and off-grid water, sewerage and energy services. As well as accounting for existing compliance obligations, the new approach is 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.

Status

Current status is Initiate

  • Initiate
  • Final

Implementation

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 

Key dates 1 Implementation stage
Sep - Dec 2021 Commission to engage and collaborate with licensees to verify operational, financial and performance information previously submitted.  
Nov - Dec 2021 Consultation on varied reporting arrangements. 
Jan - Feb 2022 The Commission provisionally assigns each licensee as Category A or B, based on the information available. The result of this classification will be communicated to licensees
Feb - Mar 2022 Licensees assessed as Category B will have an opportunity to respond and engage with the Commission, to provide further supporting information, and/or to identify a credible, measurable, remediation strategy.
Apr 2022 Release of updated reporting guideline. 
Apr - Jun 2022 Licensees formally assigned as Category A or B. The result of this classification will be communicated to licensees and published on the Commission’s website. 
30 Jun 2022 Licensees must become members of the Energy and Water Ombudsman SA (EWOSA) by 30 June 2022.  

1 Dates are indicative and may vary for individual licensees

 

End


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