Rule Changes: Completed

Retailer insolvency costs and pass through arrangements

Reference:
GRC0035
Proponents:
Jemena Gas Networks (NSW)
Decision:
Rule made
Amending rule:
NER and NGR Final Rules
Commenced:
09-Feb-2017
Amending chapters:
NER: chapter 6B, NGR: Division 4 of Part 21
Rule version:
Other rule versions:

Overview

For information on this Rule change, please refer to the Retailer-Distributor Credit Support Requirements project page.

On 22 October 2015, the Australian Energy Market Commission (AEMC) published an information notice seeking submissions from stakeholders on issues raised in a rule change request submitted by Jemena Gas Networks (Jemena). Jemena’s rule change request relates to the retailer insolvency cost pass-through provisions in the National Gas Rules (NGR).

The rule relates to the management of risks associated with retailer insolvency and raise issues that are related to rule change requests received by the Commission in relation to the retailer-distributor credit support requirements.

The rule change requests and their consolidation

The AEMC received a rule change request from Jemena Gas Networks (NSW), on 25 September 2015, to amend the retailer insolvency cost pass-through provisions in the NGR. On 22 October 2015, the AEMC initiated the rule change request and an information notice was published. The information notice sought stakeholder submissions on issues raised in relation to the retailer insolvency cost pass-through provisions in the NGR. Submissions on the information notice were due by 26 November 2015.

Under Jemena’s proposal, In particular, the rule change request proposes amendments to Rule 531 of the NGR that:

  • clarify that the pass-through amount includes both foregone revenue and the cost impacts of retailer insolvency; and
  • the Australian Energy Regulator approved pass-through amount is to be reflected in tariffs through the reference tariff variation mechanism pursuant to the distributor’s access arrangement regardless of whether or not the access arrangement contemplates or is inconsistent with the pass-through mechanism prescribed in the NGR.

In addition to this rule change request, the AEMC received two rule change requests from AGL Energy, on 19 January 2015, to amend the retailer-distributor credit support requirements, for changes to the NER and NGR, respectively. Background information and documentation of the AGL rule change request related to the NGR can be found here.

Due to the common issues raised in the AGL and Jemena rule change requests, the AEMC has consolidated Jemena’s rule change request with AGL’s rule change request relating to the NGR. The two requests will be treated as one for the purposes of Chapter 9 of the National Gas Law.

Furthermore, this consolidated request will be addressed under the process for the AGL rule change request relating to the NER (see here). This reflects the common issues raised by AGL’s rule change requests and Jemena’s rule change request.

 

 

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Documentation