Striking a just balance: regulating alternative energy sellers in an evolving market

This submission addresses the Australian Energy Regulator’s (AER) revised Draft Exempt Selling Guideline version 4 (the Guideline). The AER is proposing to amend the guideline to bring alternative energy selling activities within the exempt selling framework, including proposing a new class exemption. They are also consulting on changes to regulating retrofitted embedded networks, requiring exempt sellers to claim government energy rebates and concessions for exempt customers and a number of other changes. PIAC’s priority is to ensure residential consumers are effectively and adequately protected. At the same time, PIAC believes it is important that regulation does not create barriers to innovative business models especially those that are likely to reduce energy use and, therefore, costs to consumers. In this vein, and particularly in the context of alternative energy sellers, it is important that compliance requirements do not present a barrier for new competitors to enter the market and, therefore, regulatory divergence is necessary to reflect the different circumstances of exempt sellers.  PIAC notes that it is possible that the exemptions framework could be used to circumvent the obligation to consumer protections that are required under a retail authorisation. Some energy retailers have set up subsidiary companies to provide solar and other energy management services, and have obtained exemptions for these companies. Alternative energy sellers whose energy sales are significant in terms of scale and/or scope should be subject to additional regulatory requirements that allow the AER to appropriately monitor their activities, gather data and have a stronger regulatory role to ensure that adequate consumer protections are afforded wherever possible. Overall, PIAC’s agrees with many of the AER’s proposed changes but also reiterates recommendations regarding hardship schemes, Ombudsman membership and the continued monitoring of the appropriateness and relevance of the national electricity law to evolving market conditions.