National Energy Customer Framework

 

 

Work Stream: Energy Market Reform
Council Priority Issue: 5. Promoting efficiency through the development of consistent national frameworks where appropriate, including the implementation of the National Energy Customer Framework, Intergovernmental Agreement (IGA) on Energy Supply Industry Safety and the National Mine Safety Framework
Project: National Energy Customer Framework (NECF)
Timeline: The NECF (for residential and small business electricity customers) commenced in the Australian Capital Territory and Tasmania  on 1 July 2012, in South Australia on 1 February 2013 and in New South Wales on 1 July 2013.  Victoria will implement the NECF, subject to the resolution of state-specific issues. Queensland (QLD) aims to implement the NECF in 2014, subject to SCER agreeing to state-specific variations to support customers outside of south east QLD.
Key Documents: The legal instruments for the NECF include:

The legislative package to give effect to the NECF also contained amendments to the following instruments:

Overview: The NECF is a national customer protection framework for the retail sale of electricity and gas to residential and small business energy customers.  Its implementation involves the transfer of current state and territory (except Western Australia and the Northern Territory) legislation to a single set of national Laws, Regulations and Rules.
Detail: The NECF forms the final piece of the broader national energy reforms set out in the Australian Energy Market Agreement (AEMA), working in tandem with the established legislative frameworks for other elements in electricity and gas supply chains.The NECF includes provisions for;

  • The retailer-customer relationship, and associated rights, obligations and consumer protection measures;
  • Distributor interactions with customers and retailers, and associated rights, obligations and consumer protection measures;
  • Retailer authorisations;
  • Retailer of last resort; and
  • Compliance, monitoring and reporting; enforcement; and performance reporting.

The NECF therefore brings the whole energy supply chain – wholesale markets, transmission networks, distribution networks and retail markets – under national regulation with the Australian Energy Regulator (AER) overseeing a robust compliance and enforcement regime across all participating state and territories and the Australian Energy Market Commission (AEMC) overseeing the rules.

 

Benefits

The NECF is expected to facilitate an increase in retail competition by reducing regulatory complexity and lowering barriers for energy retailers to enter into the market across participating states and territories.  It will continue to encourage residential and small business customer participation in a competitive market by providing strong and equitable customer protections.

The NECF has been developed in recognition that energy is an essential service for all Australians and seeks to provide strong protections for Australians struggling to pay their energy bills.  It will operate in a complementary way with general consumer protection laws that apply in the energy sectors at both state and Commonwealth level, including privacy laws and the Australian Consumer Law.

State and territory energy laws will continue to supplement key customer protection aspects of the NECF through measures such as energy ombudsman and guaranteed service level schemes, and social policy initiatives such as community service obligations.

Who benefits?

  • All residential and some small business energy customers on commencement of the NECF in their state or territory;
  • Energy distributors who are responsible for the physical delivery of energy to customers’ premises; and
  • Energy retailers responsible for the sale of energy to residential and small business energy customers in NSW, VIC, QLD (yet to consider its position), SA, Tasmania, and the ACT when applied in their jurisdiction.

 Residential and small business energy customers

Most residential and small business customers will probably not see much difference in how their electricity and gas is supplied or in their relationship with their retailer.

However, under the NECF, residential and small business energy customers will continue to be supported by a range of robust customer protections including:

  • Guaranteed access to an offer of supply for electricity and gas;
  • A customer hardship regime, requiring retailers to develop customer hardship policies that must be approved by the AER, with certain prescribed elements to assist residential customers experiencing longer-term payment difficulties;
  • Limitations on disconnection, including processes to follow, restrictions on when disconnections can occur, additional protections for customers experiencing hardship for financial difficulty and a prohibition on disconnecting premises where life support equipment is required;
  • Mandatory minimum terms and conditions for retail and connection contracts for all residential and small business customers; and
  • Energy marketing rules that build on the requirements set out in the Australian Consumer Law to ensure customers receive full information before they enter an energy contract, and ensuring retailers are held accountable for marketing that is conducted on their behalf.

 Price Comparator website

The AER has developed a price comparator website.  The price comparator website www.energymadeeasy.gov.au/ will assist customers in comparing different prices offered by retailers in their area. It will:

  • Help customers navigate the complex electricity and gas retail markets to find a suitable energy offer for a customer’s home or small business;
  • Allow customers to compare their household electricity usage against other households in their area; and
  • Have information about energy efficiency, contracts, bills, customer rights and obligations, and the energy market.
Background: The Ministerial Council of Energy (which was the national policy and governance body for the Australian Energy Market) was tasked by the Council of Australian Governments (COAG) to implement reform under Clause 14 of the AEMA in relation to the non-economic regulation of energy distributors and for regulation (excluding price regulation) of energy retailers.  This reform encompasses the transfer of current state and territory responsibilities to the National Electricity Law, National Gas Law and the National Energy Retail Law.
Terms of Reference: Refer the AEMA
Process and Timelines: N/A
Supporting Documentation: N/A
Consultation and Submissions: N/A
Previous Consultation and Submissions: Consultation and Information Papers on the work program for the development of the National Energy Customer Framework package to complete the transfer to the AEMC and AER of national distribution and retail energy regulation functions are available on the MCE website.
Contact: scer@industry.gov.au