NATIONAL ENERGY RETAIL LAW (SOUTH AUSTRALIA) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 8 February 2011.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (15:47): I sought leave to conclude my remarks last time we considered the bill. South Australia is the lead legislator for the national gas and electricity reform. The National Energy Retail Law (South Australia) Bill forms part of a suite of legislation aimed at providing a national framework for energy access and a national framework for distribution and retail services. These reforms stem from recommendations made by COAG in 2006 and amend the Australian Energy Market Agreement.

I will ask the minister a number of questions or put them on the record so that she is able to provide an answer before we proceed, but I would be interested to know, as this is part of a suite of legislation aimed at providing that national framework—and I know we have passed some already—what other bills we are likely to see as part of this suite of legislation that reforms the national energy market.

This bill seeks to achieve a national regulatory regime for both retailers and distributors selling and supplying energy to customers. The customer framework will be under the jurisdiction of the Australian Energy Regulator (AER) as regulator and enforcing body and the Australian Energy Marketing Commission as the rule maker. This bill is aimed at harmonising the regulatory requirements for retailers across jurisdictions. This will increase efficiency and competition by reducing red tape and lowering barriers to entry.

A comment has been made to the shadow minister in his briefings that it will increase efficiency and competition by reducing red tape and lowering barriers. I would like to know, when the minister returns, what red tape is being reduced and how the efficiencies will be achieved. It is also envisaged that the bill will encourage consumer participation in the market by providing better consumer protections.

The customer framework in this bill will work alongside existing national regulatory frameworks covering wholesale markets and network access regulation. The accompanying bill, the Statutes Amendment (National Energy Retail Law) Bill, makes limited consequential legislative amendments to ensure the national retail law can run effectively within a broader energy regulation environment.

Many examples of the customer framework rely on the jurisdictional legislation to take full effect, for example, the operation of the Energy Industry Ombudsman. The jurisdiction—the state—may, for transitional purposes, or for other reasons, make amendments to the provisions of the customer framework for the jurisdiction. Different regulatory regimes in each state have meant increased costs and duplication of process for retailers across the nation.

This bill seeks to streamline that regulatory framework across many jurisdictions, and it will do that by establishing a national retailer authorisation. This will allow a retailer to obtain one authorisation, which will operate across all jurisdictions. In relation to that point, once a retailer has authorisation to operate across all jurisdictions, will they be supplying energy at the same price across all jurisdictions to similar-size customers, or will they all be open to negotiation?

This streamlining of the regulatory framework will also be achieved by providing a package of energy-specific consumer protections. These protections will complement those already provided by the general consumer protection laws. South Australian consumers will still be able to direct their complaints to the South Australian Energy Ombudsman but with the ombudsman now working under an energy-specific national complaints framework. I would also be interested to know what the impact will be on our Energy Ombudsman.

On the one hand, we have seen that this legislation is to reduce red tape. I am interested to know under what framework our state ombudsman will operate and what impact this will have on the operation of the ombudsman. I can understand that working under a national framework might be easier; it may also be more restrictive and more cumbersome. I would be interested to hear what the minister has to say in relation to the ombudsman. The framework also provides a retailer of last resort for energy and gas retailers.

The Australian Energy Regulator will be the national regulator, taking a role similar to that under the already passed national electricity law and the national gas law. The bill brings the whole of the energy supply chain (that is, wholesale markets, transmission networks, distribution networks and retail markets) under national regulation, with the Australian Energy Regulator as the overseer.

The bill applies largely to small customers and aims to provide small energy users with better protections and fairness, recognising that currently small energy users are often at a disadvantage when dealing with big energy retailers. It is interesting to note that on ABC radio this morning concerns were raised by Mr Lyell Oldfield from the general store at Marree. He said:

'The energy department says it is forced to increase prices because of the growing costs of supplying electricity to remote areas and increased grid prices.' Lyell Oldfield from the Marree store said that the cost of living in remote areas is getting too much for some businesses. He says that it could force him to move to solar energy.

I think Mr Oldfield went on in the interview to say something like he is up to about $3,000 a month and that his small shop is paying about $30,000 a year for just running a general store and that it is an increase of some 20 per cent.

I am aware that in remote communities often electricity is supplied not off the grid but through a stand-alone system. I am wondering whether any of these rural communities, especially the outback communities, are going to be able to use the Energy Regulator for any purpose at all when it comes to grievances about price, etc. I would certainly like the minister to throw some light on that issue.

The bill seeks to achieve protection for small customers, first, by defining the retailer/small customer relationship through the customer framework, and also by placing a regulatory obligation for retailers to offer supply to a customer if they are the designated retailer in an area. This means that, if the retailer had a previous connection to a property, they are obliged to provide supply to a new occupant. Where there has been no previous connection, the local area retailer is the designated retailer. There is a requirement for the designated retailer to have a standing offer of supply, incorporating a standard retail contract, and published standing offer tariffs. The designated retailer will have limited ability to change the standard retail contract and frequency of variations to the standing offer prices.

Small customers may also elect to sign up to a market retail contract. Energy retailers will be required to adhere to a set of minimum standards, which are outlined in the National Energy Retail Rules. In jurisdictions such as South Australia, where prepayment meters are allowed, the rules will also prescribe minimum terms and conditions.

Customers whose contract expires or who move into a property with an existing network connection but no contract will be supplied by the designated retailer under the deemed customer retail arrangement. Customers are required to set up a market contract as soon as possible. Retailers will also be required to develop and maintain a hardship policy, the aim being to identify and assist customers who are experiencing hardship and difficulty in paying and to assist customers to better managing their bills into the future.

The bill requires retailer hardship policies to meet minimum standards and that they be approved by the Australian Energy Regulator. The Australian Energy Regulator is to monitor and report on the compliance of the hardship program indicators. I would like the minister to provide some information to the chamber about the hardship program and the indicators, and also how often the regulator will report.

Retailers will be required to obtain explicit informed consent from small consumers when entering into market retail contracts and key transactions. A market retail contract will be void without this consent. I am interested to know how that explicit informed consent will be obtained and in what form, whether it is a written form or whether it is part of a contractual arrangement that a customer or a consumer has with a retailer. I would like some details on how that will be achieved.

Energy marketing will be required to be compliant with the national consumer law and in national telephone and e-marketing legislation. The Australian Energy Regulator will be enabled to establish, develop and operate a price comparator service. I would also like some information on that price comparator service and how it will be complied with, how it will be updated and what access the public will have to that information.

It is also interesting to note that rules will be created with respect to developing energy consumption benchmarking to be included on the customer's bill. I am interested to know what sort of criteria are used for that energy consumption benchmarking. Is it comparable size consumers in our state or comparable consumers across the nation? I am very interested in hearing how that information is to be collated.

Allowances will be made for the development of a distributor-customer relationship. I am not quite sure how one would develop a distributor-customer relationship and exactly what will be covered in that relationship, so perhaps the minister can also provide some information in relation to that. Also, this part of the bill obliges distributors of both electricity and gas to provide customers with services such as new connections, connection alterations and ongoing supply services under a direct contractual relationship.

I think most of us have been approached by people who want to change their activities, especially when it comes to consumption of electricity. It might be a developer in the CBD that has an old warehouse and wants to knock it down and build a multi-storey building, as we see with the new police building that is going up on the corner of Angas and Pulteney Streets. It was a car yard with, I suspect, relatively small electricity consumption, and now there is a large building.

There were some obligations, I think, under the sale or long-term lease of our electricity assets for the supply to be upgraded and maintained so that it met all the needs of customers. We have heard of augmentation fees and I know, from my own situation many years ago in a farming activity, that one was expected to pay significant amounts up-front for a new connection. I am wondering whether any of those costs will be regulated and scrutinised under this new national energy regulator.

My understanding is that three types of contracts will be provided: standard connection contracts for all customers; Australian Energy Regulator deemed contracts for large customers; and negotiated connection contracts for businesses with specific connection needs. Deemed contacts which apply by force of law are either regulated as a model contract or are approved by the Australian Energy Regulator.

It is also my understanding that customers who register with either a retailer or a distributor as needing electricity for life support equipment will be kept on a list and their premises not disconnected. The bill stipulates that these premises are afforded every opportunity to guard against supply interruptions. The customer framework includes a national connection framework, which is outlined in the Statutes Amendment (National Energy Retail Law) Bill 2010.

My understanding is that the legislation allows for a small claims regime empowering customers to make small claims at low cost and to efficiently seek compensation for damage to their property. The small claims regime allows for small claims to be submitted, assessed, processed and, if appropriate, compensated by the distributor.

I am also interested to know from the minister some details of exactly what would be covered by 'seek compensation for damage to their property', whether it is the loss of a shop, or the loss of frozen or chilled produce because they have been unable to secure an energy supply, or whether it is a broader range of things that would be covered under that compensation.

My understanding is that this part of the legislation also includes a framework for dealing with complaints and disputes resolution between customers, retailers and distributors, which supports the energy ombudsman schemes. This includes requiring retailers and distributors to publish complaints procedures on their websites and ensure that when complaints are handled they are done so in accordance with these procedures. I am also interested to know the time frame for dealing with complaints. Is there any requirement exercised by the regulator that complaints are dealt with in a satisfactory time frame?

It is my understanding that the bill establishes a retailer authorisation scheme, but also establishes an exempt sellers regime for businesses that sell energy but do not require authorisation. Only the Australian Energy Regulator can grant this exemption. The exemption may apply in the case of a caravan park which onsells incidental amounts of electricity. That is information that has been given to the shadow minister in another place. I would like the minister to outline what is an exempt seller. The information given to the shadow minister is that it is sellers that sell small amounts of energy or electricity. I would certainly like some more information on what is an exempt seller.

The bill also defines the retailer/distributor relationship by establishing rules for retail support, including the sharing of information and the coordination of service delivery. It establishes credit support provisions for a retailer and distributor relationship, giving guarantees to the distributor to guard against the risk of a retailer defaulting on network charges.

I am interested to know how it gives that guarantee and provides that protection, and I will certainly address that in another question. In fact, I could jump to that question now. The shadow minister, Mitch Williams, met with the South Australia Council of Social Services (SACOSS). It would like to see the banning of late payment fees. It believes that this disproportionately penalises households experiencing payment difficulties.

I notice that the bill establishes credit support provisions for the retailer and distributor relationship, giving guarantees to the distributors to guard against the risk of a retailer defaulting on network charges. So, on the one hand, the bill guarantees no defaulting, but, as it currently stands, it also allows for late payment fees to be charged to disadvantaged people in our community.

I would like some data from the minister as to what information the industry is able to provide when it comes to: why do they need this protection against them defaulting on charges when clearly they have a very close relationship? Without each other, the distributor has nowhere to sell the energy and the retailer has no energy to sell, so clearly they have a much closer relationship. I am interested to know why that has been established in this piece of legislation.

In relation to the government, we have often seen reports in the newspaper that the state government runs accounts in excess of 30 days. I think some information was published in the last 12 months or so that a range of accounts payable were 30 to 60 days, 60 to 90 days, 90 to 120 days and 120 plus. I would like the minister to provide information as to how many energy bills the state government is responsible for that have been subject to a late fee being charged against them. As I said, maybe a little tongue-in-cheek, by banning late payment fees it may save the state government some money.

I think it is important that we have all the facts on the table when we are talking about the removal of late payment fees. I think the opposition accepts that to charge someone who is disadvantaged—lost their job or for whatever reason has a shortage of financial resources—a fee for late payment adds insult to injury. Rather than it being someone who is being a bit clever and trying to extend credit and use someone else's money, it may be for very genuine reasons.

This bill also provides for the enforcement regime which reflects the current enforcement regimes in the national electricity law and the national gas law to create harmonised enforcement. These laws establish, for the first time, the power for the Australian Energy Regulator to accept enforceable undertakings from energy market participants. I am interested to know what constitutes an enforceable undertaking from an energy market participant?

This bill also provides the Australian Energy Regulator with information gathering powers for the purpose of exercising its powers and functions. I would be interested to know what information gathering powers the Australian Energy Regulator has. After spending eight years with the Hon. Graham Gunn in my party room, it has been drummed into me that you should always be suspicious of legislation that gives bodies powers for gathering information.

The bill also contains a targeted compliance framework which requires retailers and distributors to self-monitor their compliance for their own policies and procedures and to establish a new performance reporting for the retail sector. I am also interested to know from the minister when the retail sector will report, what will be reported and how that will be published—that is, whether it will be put on some obscure website—and given it is for the retail sector, will the performance reporting be provided to the retail customers?

This bill also an enables the making of the initial national energy retail rules on recommendations. The national regulations may be made for the customer framework under this bill. The passing of this bill will not result in immediate transition to a national framework. My understanding is that consequential amendments will need to be made to other energy legislation. My understanding is that they will be presented to this parliament at a later time.

As I said earlier, I would like to know what other legislation is in the pipeline so that we can make sure that we are well briefed when it is introduced. I understand the minister (Hon. Patrick Conlon) is somewhat agitated that this bill has not passed yet, although I think he gave the shadow minister (Mr Mitch Williams) a particularly short space of time in which to debate the bill. While it has been on the Notice Paper over summer, it would be nice to know what else is in the pipeline so that we can be briefed and up to speed.

I indicated that I wanted some information about late payment of fees. Another one of the SACOSS amendments that I think the Hon. Mark Parnell has on file now—and it is what SACOSS asked for—relates to retailers or distributors paying compensation for wrongful disconnections. Can the minister also provide some information in relation to wrongful disconnections? How prevalent are they? What are the reasons for wrongful disconnections?

I know that the Energy Retailers Association has provided a little information and has said that wrongful disconnections sometimes occur as a result of someone having a holiday home and the bill is sent to their holiday home address, but they only go there once a year and it gets lost in the system. The other example they gave us was when a person is in prison. They did not think they should be paying compensation to someone if they disconnected their power because they were in prison.

I would have thought that if we were going to enshrine something in legislation, it would have to be more significant than people who have holiday homes or who are in prison, so I would like some information from the minister on those wrongful disconnections. With those comments, I indicate that the opposition is happy to support the bill, although I think my colleague the Hon. Rob Lucas may make some comments at a later stage.

Debate adjourned on motion of Hon. J.S.L. Dawkins.