A number of reform changes are being considered to improve the Retailer of Last Resort scheme put in place to protect customers in the event that an electricity or gas retailer goes out of business.
The Australian Energy Market Commission (AEMC) today released a directions paper and is seeking feedback on a number of potential improvements to the scheme, which was introduced in 2012.
Through the Retailer of Last Resort scheme, if an energy retailer goes out of business or ‘fails’ its customers are transferred to a new energy provider as a ‘Retailer of Last Resort’ to ensure that customers’ energy supply is maintained.
In 2022, geopolitical circumstances and record wholesale prices placed additional pressures on retailers operating in the energy market, resulting in the collapse of seven authorised retailers and triggering Retailer of Last Resort events.
With insights gained during the past year and stakeholder feedback having also been taken into consideration, the AEMC has prepared separate recommendations for electricity and gas events.
For electricity retailer failures, the AEMC is considering options to reduce costs for customers and remaining retailers, such as:
- lowering the costs for the designated Retailer of Last Resort by clarifying the market costs it can claim
- lowering costs for customers by introducing a mechanism to issue the failed retailer a bill for the costs the designated Retailer of Last Resort experienced from the failure
- providing the Australian Energy Regulator (AER) and designated Retailer of Last Resort with better information about its new customers.
For gas retailer failures, the AEMC considering recommendations which:
- improve the Retailer of Last Resort gas directions framework to clarify the current arrangements and better support the designated Retailer of Last Resort to manage new customers
- provide the AER and designated Retailer of Last Resort with better information about its new customers
- clarify how the benefits and costs of a Retailer of Last Resort are shared with customers.
Submissions in response to directions paper close at 5.00pm AEST 22 June 2023.
Media: Jessica Rich, 0459 918 964, firstname.lastname@example.org