Submission: Essential Services Commission Victoria Harmonised Energy Retail Code

The signatories to this submission represent the interests of the majority of Victorian residential and small business energy consumers – being particularly cognizant of the special needs of low income and vulnerable households – and we have a keen interest in ensuring that consumer protections in this evolving energy market are not diminished and that Victorian consumers are not worse off.

In June 2012, the Victorian Government deferred Victoria’s transition to the NECF to “ensure there was no reduction in key protections for Victorian consumers, [and to] “explore opportunities to align Victoria’s retail and consumer protection arrangements with the NECF where it did not result in lower standards for Victorian consumers.”[1] Subsequently, the Minister for Energy and Resources requested the Commission to consider harmonising the regulations contained in Victorian Codes and Guidelines to the extent possible with the NECF, as set out in the National Energy Retail Law (Victoria) Bill 2012.  In the Minister’s July 2012 letter to the Commission, the Minister noted that the “the current Victorian regulatory regime and the proposed framework under the National Energy Retail Law (Victoria) Bill 2012 (NERVLA) were substantially equivalent in terms of protections to Victorian energy consumers”.[2]

We support transition to the NECF with appropriate derogations to maintain protections for Victorian consumers.  In the interim, we support aligning Victoria’s Energy Retail Code with the NECF where it does not result in lower consumer protections for Victorians.  However, we are concerned with the Commission’s proposed Energy Retail Code Version 11 (ERC V11) which if implemented, would result in lower protections for Victorian consumers. Our analysis of ERC V11 (which is elaborated fully in Table 1 below) reveals that the consumer protections are not only un-equivalent to those that exist under ERC V10, but are in fact substantially lower than current protections.

Victoria’s retail energy market is the most dynamic and deregulated in Australia.  Industry often hails it as the model for other markets to follow.  A cornerstone of the Victorian policy framework has been the well-designed consumer protection regime that aims to ensure that consumers can confidently participate in the competitive market.  As energy market reform continues to be further advanced in Victoria than other states, it is essential to maintain this regime to support the operation of the competitive market. Consumer protections serve to complement, rather than detract from, innovations such as price deregulation and time of use pricing.  A loss of consumer protection may erode consumer confidence in the market and reduce the willingness of consumers to participate. In turn, this would reduce the effectiveness of competition.

Victorian regulations have traditionally provided stronger consumer protections than other jurisdictions. It is fundamentally important that Victorian consumers’ current protections are not compromised particularly in a time where there are increasing prices and market complexity. We support best practice consumer protection in essential services and this should be reflected in the overall approach towards transitioning to the national framework, regardless of the complexities involved.

We would like to see Victoria continue to be a leader in the provision of energy services to consumers and for the energy market to continue to evolve without undermining the key consumer protections currently available to Victorian consumers. To ensure that “there is no reduction in key protections for Victorian consumers”, the Commission’s development of ERC V11 must take into account the evolution of the Victorian market through the introduction of competition, deregulation and more recently smart meters.  The Energy Legislation Amendment (Flexible Pricing and Other Matters) Bill 2012 proposes amendments to the Electricity Industry Act 2000 to enable, by order in council, the implementation of appropriate consumer protections where energy retailers choose to make available flexible pricing plans to their electricity customers. The Commission needs to ensure that the proposed ERC V11 accommodates any changes which may be brought about by flexible pricing in July 2013.  Further, ERC V11 must be aligned with the spirit and integrity of the previous Energy Retail Code Version 10 (ERC V10).

This can be achieved by ensuring we continue to respect and protect the role and rights of consumers in the market and serves the dual purpose of ensuring Victoria continues to be the nation’s leader in both the market innovation and robust consumer protection.

To read our submission in its entirety, click here: Essential Services Commission Victoria Harmonised Energy Retail Code –Consultation Paper.

[1] Essential Services Commission, Harmonisation of Energy Retail Codes and Guidelines with the National Energy Customer Framework Consultation, at 1.

[2] Essential Services Commission, Harmonisation of Energy Retail Codes and Guidelines with the National Energy Customer Framework Consultation, at 1.

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