Rule Change: Completed
Overview
On 17 September 2015, the AEMC published its final rule determination to not make a rule in relation to the Aligning Network and Retail Tariff Structures for Small Customers rule change request.
The Commission considers that energy retailers have access to appropriate tools to help them manage the risk of misalignment between network and retail tariff structures should a state or territory government require them to make a standing offer with a prescribed price structure. In addition, enhancements made to the rules in late-2014 as a result of the Distribution Network Pricing Arrangements rule change provide retailers with additional tools to manage this risk.
The proposed rule, if made, would have reduced retailers’ risks, but would have imposed additional risks and administrative costs on distribution businesses that may have been passed on to all consumers in the form of higher network charges. The Commission considers that this is an inefficient allocation of risk.
Background
On 25 June 2014, the Council of Australian Governments’ (COAG) Energy Council submitted a rule change request to the AEMC seeking to amend the distribution pricing rules under Chapter 6 of the National Electricity Rules to place new obligations on distribution businesses with respect to network pricing.
Specifically, the rule change request proposed that, where a state or territory government enacts a local instrument under the National Energy Retail Law to require retailers to make a standing offer with a prescribed tariff structure to small customers with an interval meter, distribution businesses would be required to:
- make available a network tariff with a structure that matches that of the retailers’ standing offer; and
- allow retailers to assign small customers to this network tariff where those customers have chosen the standing offer.
Further, the rule change request proposed to require the Australian Energy Regulator to only approve a distribution business' annual pricing proposal if it met the above requirements.
On 2 April 2015, the AEMC gave notice under section 95 of the National Electricity Law to initiate and assess the rule change request. A consultation paper was also published that summarised the rule change request and identified a number of issues for consultation. In response, 15 submissions were received from stakeholders when consultation closed on 7 May 2015.
On 16 July 2015, the AEMC published a notice under section 99 of the National Electricity Law and a draft rule determination. The Commission’s draft rule determination was to not make a rule. Nine submissions were received from stakeholders in response, with all but one submission supportive of the Commission’s draft rule determination.