The AEMC has started work on changes to make sure consumer protections are keeping pace with the restructuring power system.

By Stephanie Flechas, Adviser - Retail and Wholesale Markets

This year’s retail energy competition review called for major changes to the National Energy Customer Framework (NECF) so consumers have the best opportunity to  access new models of energy supply if they want.

It’s important to take action now so rules and regulations are not left behind by the pace of change. We want to do two things: remove any barriers to innovation in retail energy markets that might be stopping people accessing better products and services; and make sure consumers receive appropriate protections.

Over recent years we have seen dramatic changes in the way that electricity is supplied with increasing take-up of solar PV and batteries. New technology is spreading through the system and starting to get cheaper for households and businesses. Consumers have a very different place in this evolving market. More people are generating their own power through solar PV and selling locally produced electricity back into the grid. It’s only a matter of time before people in the same street could be trading power with each other.

The energy consumer framework is designed to complement Australian Consumer Law (ACL) by providing additional consumer protections for the supply of essential energy services. It works to strengthen consumers’ rights to access energy on fair and reasonable terms.

The new consumer protection work underway by the AEMC will examine consumers’ needs in areas of change where protections might be needed.

We are looking to help consumers

• address problems with their new energy services and products (solar PV, batteries, energy management devices, etc.) and how these are related to the protections and obligations under the NECF
• participate in the market when they are not only consuming electricity but also supplying and storing electricity.

The competitive retail market should be backed by a strong consumer protection framework for those that need it most and where there is risk of consumer harm when things go wrong. Enhancements to this framework are a key priority for the Commission.

Updating the national energy consumer framework and next steps

Building on the consumer protection mapping undertaken for the Retail energy competition review (28 June 2019), the AEMC is underway with its analysis of changes needed to update the national energy consumer framework in relation to non-traditional energy services and products.

Taking stock of what needs to be done: phase one

In its first phase, the AEMC mapped the consumer protection elements under the NECF and the ACL. This was published within the 2019 Retail energy competition review.

There are differences between energy-specific consumer protections and more general consumer protections contained within the ACL. In order to understand these differences, and as a first step to reviewing how the NECF can continue to be fit for purpose, we have reviewed and mapped the consumer protection elements of the NECF and the ACL, within the following key sections on the AEMC website:

How energy consumers are protected under the NECF and ACL

• Mapping of the consumer protections under the NECF and the ACL identifying consumer outcomes under each framework
  • Contract terms 
  • Marketing and offers
  • NECF additional information requirements
  • Service standards and quality
  • Complaints and dispute resolution
  • Additional protections under the NECF
• Jurisdictional differences within the NECF
• A description of the enforcement powers to compare how consumers are protected under both frameworks and which are the applicable penalties and remedies 
• Analysis of consumer protection for non-traditional energy services and products.

Pushing forward with reform: phase two

Starting this month we will review whether changes to the NECF are necessary to make consumer protections fit for purpose and reduce barriers to innovation with a focus on:

• demand response mechanisms for small customers (DRM)
• distributed energy resources (DER).

Inviting stakeholder to help inform our thinking on this work: next steps

The AEMC will be calling for stakeholder feedback on an issues paper to be released in October 2019. We also plan to hold a series of workshops in advance of a draft report to be released in early 2020.

For more information, please refer to the AEMC's website  or contact Stephanie Flechas on (02) 8296 0640 or at stephanie.flechas@aemc.gov.au

Background

The NECF is a suite of legal instruments that regulate the sale and supply of electricity and gas to retail customers.

Main NECF documents are the:

• the National Energy Retail Law (Retail Law)
• the National Energy Retail Rules (Retail Rules) and
• the National Energy Retail Regulations (Regulations)

Parts of the NECF are also contained in new chapters of the National Electricity Rules and the National Gas Rules.

There are also relevant:

• guidelines made by the Australian Energy Regulator (AER)
• procedures made by the Australian Energy Market Operator (AEMO).

The NECF currently applies in:

• Australian Capital Territory (commenced 1 July 2012);
• Tasmania (commenced 1 July 2012);
• South Australia (commenced 1 February 2013)
• New South Wales (commenced 1 July 2013);
• Queensland (commenced 1 July 2015); and
• Victoria - Chapter 5A of the National Electricity Rules only (commenced 1 July 2016).

The National Energy Customer Framework does not currently apply in Western Australia or the Northern Territory and, as noted above, only applies in a limited manner in Victoria. The Northern Territory has adapted a modified form of chapter 5A of the National Electricity Rules with effect from 1 July 2019.

The NECF was developed by State, Territory and Commonwealth energy Ministers through the Council of Australian Government’s Standing Council on Energy and Resources (now the COAG Energy Council).