Currently, Queensland's electricity prices are regulated under the Electricity Act 1994 (Qld) (Electricity Act) and are set by price determinations made by the Queensland Competition Authority (QCA). However, the on-supply of electricity in manufactured home parks is regulated by Section 99A of the Manufactured Homes (Residential Parks) Act 2003 (Qld) (MHRP Act).
As park owners would be aware from previous Alerts (most recently, our Alert of 12 February 2015), the manner in which Section 99A regulates the on-supply of electricity to home owners has been the subject of much conjecture and dispute since its enactment in March 2011. The Pomroy matter (referred to in our Alert of 12 February 2015) is currently before the Appeal Tribunal awaiting determination.
However, in the background, and separate to the obligations imposed by Section 99A of the MHRP Act, the manner in which electricity may be on-supplied under the Electricity Act is about to change. Despite the fact that these measures may well not specifically apply to park owners, it is nevertheless useful for park owners to be aware of their existence and that the former arrangements under the Electricity Act will change.
In this regard, the Electricity Competition and Protection Legislation Amendment Act 2014 (Qld) (ECPLAA) and the National Energy Retail Law (Queensland) Act 2014 (Qld) (NERLA) were passed with amendment on 10 September 2014 and given assent on 26 September 2014. This legislation will change the way the retail electricity market will operate in Queensland, and particularly in South East Queensland.
The introduction of the ECPLAA and the NERLA will not expressly amend the MHRP Act, such that Section 99A of the Act will still apply to the on-supply of electricity in residential parks in Queensland. Accordingly, if Section 99A of the MHRP Act currently applies to the manner in which you on-supply electricity to home owners in your park, then the matters discussed in this Alert will not affect you. This new legislation will, however, omit Section 20J of the Electricity Act, which currently deals with the maximum charges for electricity supplied and sold by an on-supplier to a receiver and measured by a meter.
The ECPLAA and the NERLA are to be implemented on a date to be fixed by proclamation, but it is expected that they will be implemented on 1 July 2015. On 28 April 2015, the Queensland Government announced that it would hold off on implementing the "market monitoring regime" component for a further 12 months while the Government reviews the likely impact on electricity prices of the proposed deregulation. However, the remaining changes are still expected to be implemented on 1 July 2015.
The ECPLAA will amend the Electricity Act to:
- remove retail price regulations in South East Queensland;
- establish a market monitoring regime (although, as noted above, this component will be delayed by 12 months); and
- remove duplication and align terminology with the NERL.
Under the ECPLAA, the QCA will no longer be responsible for setting the price of electricity in South East Queensland. Instead, electricity retailers will set their own price for electricity in competition with other retailers, and the current regulatory scheme will be replaced with a price monitoring regime. The NERLA contains some transitional restrictions to restrict retailers from levying certain new fees and charges on customers in South East Queensland for a period of two years. For areas in Queensland outside of South East Queensland, regulated retail prices for electricity will be retained.
Given these changes, the ECPLAA will also establish a market monitoring regime that will be used to assess the level of competition in the deregulated area of the electricity market. The ECPLAA enables the Minister to direct the QCA to provide a yearly written report on the operation of market monitoring in South East Queensland.
The ECPLAA also establishes a limited reserve power to allow the Minister to re-introduce price controls in South East Queensland should competition become ineffective. The Minister's power will, however, be subject to an independent review. Before the Minister can reintroduce price controls, the Minister must be satisfied from the independent review that competition is not effective and the independent report must advise that the reintroduction of price controls is necessary.
The NERLA will introduce the National Energy Customer Framework (NECF), subject to reforms specific to Queensland, which will regulate the sale and supply of energy to consumers in Queensland. The NECF is a set of national laws, rules and regulations that will govern the sale and supply of energy to residential and small business energy customers. The NECF will bring the whole energy supply chain (wholesale markets, transmission networks, distribution networks and retail markets) under national regulation.
Under the provisions of the NECF, residential and business customers consuming less than 100MW of electricity per annum will be classified as "small customers". Small customers will transition to the NECF standard retail contract (a default contract) unless they have negotiated and agreed to specific terms. Small customers on standard retail contracts will pay the retailer's standing offer price. For electricity customers outside of South East Queensland, the standing offer price will be the regulated notified price under the Electricity Act, but for customers within South East Queensland the ECPLAA will allow each retailer to determine its own standing offer price.
Small customers on negotiated retail contracts will continue on those terms as 'market retail contracts' except to the extent that the terms do not meet the minimum standards set out in the NECF.
Relevantly, on-sellers of electricity who do not hold a retail authority will be transitioned on to the NECF as 'exempt' sellers and will continue to be able to sell electricity to premises subject to the Australian Energy Regulator guidelines. Some existing on-suppliers will transition into the NERLA under class exemption arrangements so will not be required to apply for individual exemptions in order to continue to sell electricity to receivers. The conditions for the sale of electricity under a class exemption are contained in the Australian Energy Regulator's exempt seller guidelines (which we discuss further below).
The NERLA 'exempt seller' framework gives small customers in on-supply situations broadly equivalent protections to other customers, including increased access to concessions. Section 13 of the NERLA provides for instruments or decisions made by the Australian Energy Regulator to be validated. This will include guidelines for exempt sellers (being the rules that entities must comply with if they wish to sell energy to customers at premises without a retail authorisation).
The Australian Energy Regulator Retail Exempt Selling Guideline April 2015 (Guideline) sets out three types of exemptions from the requirement to hold a retail authorisation, being "deemed exemptions", "registrable exemptions" and "individual exemptions". The Guideline is available at: https://www.aer.gov.au/node/29390.
Notably, the Class R4 registrable exemption applies to persons selling metered energy in caravan parks, residential parks and manufactured home estates to residents who principally reside there.
Registrable exemptions are not automatic. In order to register for an exemption, an on-supplier will need to complete the registration form available at https://www.aer.gov.au.
Under the Guideline the following core exemption conditions (set out at Appendix A-2 of the Guideline) provide that on-suppliers of electricity:
- Cannot refuse to sell energy to a customer who meets the criteria for the exemption class, except in accordance with relevant disconnection provisions.
- Cannot refuse to sell energy to a customer on the basis that the customer owes them outstanding amounts from a previous account.
- Must advise customers, in writing, at the start of their tenancy/residency/agreement of, amongst other things, their rights to elect to purchase energy from a retailer of their choice and information on the options for metering that would allow this choice, the obligations on the on-seller, dispute resolution processes, the applicable conditions, rebates, concessions and relief schemes and forms of assistance available, energy tariffs, fees and charges, flexible payment options and relevant emergency numbers.
- Must ensure that bills are issued to each customer at least once every three months and must offer flexible payment options to a customer who has identified themselves as being in financial difficulty.
- Must include the following particulars in a bill for a customer:
- the customer's name and address;
- the date that the account was issued;
- the identifier of the meter for the customer's premises;
- the pay-by date for the bill;
- the date of the current meter reading or estimate, as applicable;
- the dates to which the meter reading or estimate applies;
- the current meter reading or estimate in kilowatt hours and/or cubic metres;
- the previous meter reading or estimate in kilowatt hours and/or cubic metres;
- the amount of energy consumed, or estimated to be consumed, in the meter reading period. For electricity, consumption must be shown in kilowatt hours. For gas, consumption must be shown in cubic metres and mega joules and must note the heating value and pressure conversion factor that has been applied (these must be the same as those applied by the retailer from whom the on-seller purchases gas for the site);
- the tariffs, fees and charges applicable to the customer;
- the basis on which tariffs, fees and charges are calculated;
- any amount deducted, credited or received under a government or non-government funded energy charge rebate, concession or relief scheme or under a payment arrangement;
- details of the available payment methods; and
- a telephone number for account inquiries and complaints.
- Must use best endeavours to ensure that the meter for each customer is read and used as the basis, or apportioned, for any bill issued and cannot rely on an estimation of the meter value at the start of an energy supply for the purpose of issuing a final bill to a customer.
- Must ensure the pay-by date for a bill must is not less than 13 business days from the date on which the bill is issued.
- Must provide each exempt customer with a receipt for any amount paid for energy, except where payment has been made by direct debit or credit card over the phone and the customer is provided with a receipt number.
- Must not charge the customer tariffs higher than the standing offer price that would be charged by the relevant local area retailer for new connections, if the local area retailer were to supply that quantity, or estimated quantity, of energy directly to the premises of the customer.
- Must provide notice to the customer of any change in the customer tariff as soon as practicable and no later than the customer's next bill.
- Must not impose any charge on a customer that could not be charged by the relevant local area retailer for new connections under a standard retail contract.
- Must limit any fee charged to a customer for late payment to a recovery of reasonably incurred costs by the park owner as a result of the customer's late payment.
- Can recover an amount that a customer has been undercharged subject to certain conditions.
- Must inform a customer if they have been overcharged, within 10 business days of becoming aware of the overcharging and repay the amount overcharged, subject to certain conditions.
- Must, where a customer informs the on-supplier that it is unable to pay energy bills due to financial difficulty:
- direct the customer to the Australian government energy efficiency website or another information resource with energy efficiency advice; and
- ensure that the customer is aware of relevant government or non-government energy rebates, concessions and relief schemes; and
- not charge the customer a late payment fee; and
- not charge the customer a security deposit; and
- must not proceed with disconnection or cessation of energy supply to a customer unless the following requirements have been met:
- the customer has requested disconnection; or
- continuity of supply to the premises would be unsafe; or
- the customer's tenancy/residency/agreement has ended and the customer is vacating the premises; or
- the customer has not paid a bill by the pay-by date or has not adhered to the terms of a payment plan.
- Must not disconnect or cease energy supply to a customer's premises, except where requested, if:
- a person residing at the premises requires life support equipment that depends on energy for its operation, or
- an application has been made by or on behalf of the customer for assistance by a rebate, concession or relief and a decision on the application has not been made, or
- the customer has made a complaint directly related to the proposed reason for disconnection or cessation of supply and the complaint remains unresolved, or
- the disconnection or cessation of supply would occur on:
- a business day before 8am or after 3pm, or
- a Friday or the day before a public holiday, or
- a weekend or a public holiday, or
- the days between 20 December and 31 December (inclusive) in any year.
- Must reconnect the premises as soon as practicable where they have arranged for the disconnection of a customer's premises and the customer has within 10 business days of the disconnection rectified the matter that led to the disconnection, made a request for reconnection, and paid any charge for reconnection.
- Must not hinder a customer's attempts to establish eligibility to receive an energy rebate, concession or assistance under a relief scheme. If the rebate, concession or assistance can only be claimed by the on-supplier on behalf of the customer, the on-supplier must use their best endeavours to make a claim and, if successful, must apply the rebate, concession or assistance to the customer's bill.
- Must not do anything to discourage or prevent a customer, who is eligible under state or territory legislation to purchase energy from a retailer of their choice, from exercising this choice.
- Must provide a means of contact for account inquiries and complaints that can be readily accessed by customers.
- Must make reasonable endeavours to resolve any dispute with a customer and advise the customer of any right that the customer has to access external dispute resolution bodies.
- Where a customer provides confirmation from a registered medical practitioner that a person residing at the customer's premises requires life support equipment, the park owner must:
- advise the person whose distribution network the sale of energy is occurring within that a person residing at the premises requires life support equipment, and
- advise the authorised retailer and distributor that a person residing at the premises requires life support equipment, and
- provide the authorised retailer and distributor with any relevant information about the premises for the purposes of updating their records and registers.
- Notify the customers and the AER immediately if they are (or expect to be) disconnected, or there is any likelihood that they will be unable to continue selling energy.
- Provide for the termination of energy supply agreement.
- Maintain records for each of its customers.
If an on-supplier does not meet its exemption conditions, the AER will, in the first instance, work with the on-supplier to ensure that the breaches are rectified. However, if the non-compliance is serious, the AER may revoke the on-supplier's exemption.
It is important that park owners are aware of the above guidelines. Whilst Section 99A of the MHRP Act remains in effect, it has been earmarked for review (given the conjecture and disputes we referred to earlier in this Alert) and it remains to be seen as to whether these requirements or similar will feature in any amendment that is proposed or made to Section 99A in the future.
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