Australia: Queensland electricity retailers: prepare now for changes of the law to avoid the shock

HG Alert: 20 April 2015

This alert concerns:

  1. anyone who owns or operates a facility where electricity is on-sold (on-supplier), for example multi-user industrial facilities, shopping centres and caravan parks in Queensland; and
  2. anyone who generates electricity and sells that electricity to another person.

Special Counsel Peter Burge and Associate Emily McCartney discuss further.

Proposed changes to the regulation of the sale of electricity in Queensland

The National Energy Customer Framework (the Customer Framework) is expected to commence in Queensland on 1 July 2015. A number of different laws and regulations (including the National Energy Retail Law (Queensland) Act 2014 (Qld)) will implement the Customer Framework. In this Alert, we refer to these together as the Retail Reform Laws.

The Retail Reform Laws will bring the regulation of the sale of electricity (as well as gas) in Queensland more into line with the regulation of such activities throughout the other States on the east coast of Australia.

How does this change in the law affect you?

If your business involves the sale of electricity, including for example on-supply to your tenants, you will be required to comply with the Customer Framework as implemented in Queensland.

How will the regulation of on-supply in Queensland change from 1 July 2015?

Currently the sale of electricity in Queensland is regulated under the Electricity Act 1994 (Qld) (Electricity Act). Typically, on-suppliers are exempt from the requirement to hold either a retail or distribution authority otherwise required by the Electricity Act.

Primarily, if you are an on-supplier in Queensland and wish to avoid having to apply for a retailer authorisation under the Retail Reform Laws, you will need to ensure that you have the relevant exemption. There are three classes of exemption available: deemed, registrable, and individual exemptions.

On 10 April 2015 the Australian Energy Regulator released a new version of the AER (Retail) Exempt Selling Guideline. These guidelines set out in what circumstances the various types of exemption are available.

Certain generators also impacted by the Retail Reform Laws

Similarly, those who currently generate and distribute electricity in Queensland, whether pursuant to a special approval, deemed special approval or a generation authority (where that authorisation allows the holder to sell electricity), will also be affected by the change in the law.

Transitioning into the new Customer Framework

The differences between the current law and the regulatory regime that will take effect from 1 July, and the implications for retailers, on-suppliers, and generators are summarised in the table below:

Current requirements Transitional arrangements New Customer Feedback

Current holders of retail authority are authorised to provide customer retail services. 

Any retail authority issued under the Electricity Act will cease to have effect when the amendments proposed in the Retail Reform Laws commence.

However holders of retailer authorisations for electricity will be deemed to hold a retail authorisation under the Retail Reform Laws.

The Customer Framework imposes a new regulatory regime on retailers, including dealing with such matters as pricing, billing, arrangements for customers having difficulty paying their electricity bills, and disputes handling mechanisms.

Current on-suppliers are generally exempt from the requirement to hold either a retail or distribution authority to on-supply electricity.

No transitional provisions apply.

Upon the commencement of the Retail Reform Laws on-suppliers will no longer be to sell electricity without either:

  • obtaining a retailer authority; or
  • fitting within, or applying for a relevant exemption (as appropriate).

Note: the exemptions (or retailer authorisation) must be in place prior to the commencement of the Retail Reform Laws.

Current holders of a special approval or generation authority are authorised to generate electricity and sell it in accordance with an approval or authority granted under the Electricity Act.

The special approval or generation authority holder is granted a one year transitional exemption commencing on the Retail Reform Laws coming into affect.

The holders of transitional special approvals or generation authorities are subject to certain conditions as from the 1 July, and will either need to apply for a new authority under the Retail Reform Laws or determine if there is an applicable exemption available to it after the end of the transitional period.

Operators of generating plant with a capacity of 30MW or less currently generate and sell  electricity pursuant to a deemed special approval under the Electricity Act. 

See comments above regarding special approval holders. A new category of exemption to be developed to apply to entities currently selling electricity under the deemed special approval has been mooted.

It is important that all businesses that are involved in the sale of electricity in Queensland (on any scale) consider how the implementation of Customer Framework in Queensland will affect it and take steps to prepare for the new regime.

© HopgoodGanim Lawyers

Award-winning law firm HopgoodGanim offers commercially-focused advice, coupled with reliable and responsive service, to clients throughout Australia and across international borders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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