Rule Changes: Completed

Multiple Trading Relationships

Reference:
ERC0181
Proponents:
AEMO
Decision:
Rule not made
Overview

On 25 February 2016 the Australian Energy Market Commission (AEMC) published a final rule determination to not make a rule in relation to the multiple trading relationships (MTR) rule change request.

On 25 February 2016 the Australian Energy Market Commission (AEMC) published a final rule determination to not make a rule in relation to the multiple trading relationships (MTR) rule change request.

The Commission has decided not to make a draft rule because:

  • The need for a new framework is limited as customers can already engage multiple retailers at a premises under the current rules, and other market reforms can provide similar benefits to customers without additional costs.
  • Implementing the rule change request is unlikely to deliver material benefits for most customers but is likely to impose significant costs on retailers and distributors, which may result in increased electricity retail prices for all customers.

The rule change request follows earlier work by the AEMC as part of the Power of Choice review to develop a new framework to better enable customers to set up multiple trading relationship (MTR) arrangements.

MTR refers to the ability of a customer to engage with multiple retailers at a premises. This could include having different retailers to supply electricity to separate parts of a premises, or different retailers to supply electricity to specific appliances, such as a pool pump or electric vehicle.

Under the current National Electricity Rules (NER), a customer who wishes to engage with multiple retailers can do so by establishing a second connection point. The rule change request was intended to make it easier for customers to engage with multiple retailers, by implementing a new framework that removed the need for a second connection point.

Since the initial concept of MTR was raised, market conditions have changed and new information has become available. This in turn has changed the Commission's assessment of the merits of implementing a new framework to better enable MTR.

The Commission has determined that the proposed framework is unlikely to reduce the cost incurred by most consumers that wish to engage with multiple retailers. While a small number of customers may benefit, other customers that do not wish to engage with multiple retailers are likely to face increased electricity retail prices resulting from the costs retailers and distributors would incur by accommodating the proposed framework in their IT systems. Additionally, the current rules were found to better support MTR than initially thought.

Background

The Australian Energy Market Operator (AEMO) submitted this rule change to the AEMC on 17 December 2014. This followed a request from the COAG Energy Council for AEMO to develop a framework to better enable customers to engage with multiple FRMPs at to submit this as a rule change request to the AEMC.

On 30 July 2015, the AEMC began consultation on a rule change request from the Australian Energy Market Operator (AEMO) that was intended to make it easier for customers to engage with multiple retailers at a premises.  

The Commission received 24 submissions to the consultation paper. Stakeholders generally considered that the rule change request was unlikely to deliver benefits for customers but was likely to impose significant compliance costs.

On 19 November 2015, the AEMC published the draft rule determination, which outlined the intention to make no rule.

The Commission received 17 submissions. The vast majority of stakeholders supported the decision to make no rule, and considered the proposed framework would likely lead to higher electricity prices for all retail electricity customers, and was unlikely to facilitate increased improved competition in retail electricity markets.

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