Business Law Articles
By: Stuart Lowe, Esq. & Rebecca Castley, Esq.
On 1 July 2015, Queensland will join several other States by implementing the National Energy Retail Law (NERL). Many Body Corporates will be covered by the new laws and will need to take prompt action to comply with them.
What is NERL about?
Generally, the purpose of NERL is to:
- establish a national regulatory scheme;
- establish a national regulator, being the
- Australian Energy Regulator (AER); and improve consumer protection.
Under NERL, anyone who sells electricity or gas to others for use at premises must have either a retailer authorisation or a retail exemption. For NERL to apply, it is not necessary to make a profit from selling energy or for the sale of energy to be the main part of the seller’s activities. Passing on energy costs as an incidental part of other activities, even on a purely cost-recovery basis, is sufficient. This will apply to Body Corporates who purchase energy from a retailer and on-supply that energy to lot owners/occupiers (customers) for use in their premises.
Most Body Corporates would prefer to avoid the costs and formalities associated with obtaining a retailer authorisation, as the sale of energy is merely incidental to their activities. For this reason, NERL provides for a three-tier system of retail exemptions, as follows:
Deemed exemptions apply to very small-scale supplies of energy. For example, Body Corporates selling metered energy to fewer than ten residential or small commercial/retail customers within a single site are entitled to a deemed exemption. Small customers are those consuming less than 100 MWh per annum for electricity or one terajoule per annum for gas.
Deemed exemptions apply automatically - suppliers do not need to apply for the exemption or register their exemption with the AER.
Registrable exemptions must be registered with the AER before the exemption can apply. Registration can be effected via an on-line form on the AER’s website (www.aer.gov.au). Registration is different to applying for an exemption, in that the AER does not need to approve a registrable exemption.
Body Corporates who sell metered energy within a site to ten or more residential or small commercial/retail customers - or to one or more large customers - may register an exemption.
Individual exemptions are required in circumstances not covered by a class of deemed exemption or registrable exemption.
When an application for an individual exemption is lodged with the AER, it will be considered on a case-by- case basis. Once accepted, the AER will publish a notice on its website and seek written submissions from interested stakeholders. The consultation period will run for at least 20 business days before the application can be finally approved. If approved, the AER will advise the applicant of any conditions to be attached to the exemption. The applicant will need to formally accept those conditions before the exemption takes effect.
Accordingly, applying for an individual exemption is a more rigorous process than registering a registrable exemption.
Exemptions (including deemed exemptions) from the requirement to obtain a retailer authorisation carry certain conditions. These conditions are designed to give customers in on-supply situations broadly equivalent protections to those enjoyed by other customers.
Most Body Corporates who are entitled to a deemed or registrable exemption must, at the start of a customer’s occupancy/agreement, advise the customer in writing of certain matters, including:
- the applicable energy tariffs, fees and charges;
- the customer’s rights in relation to dispute resolution;
- that the landlord is not subject to all of the obligations of an authorised retailer;
- contact numbers to report faults and emergencies;
- and for residential customers:
- available flexible payment options, such as periodic instalments;
- the availability of government or non-government rebates, concessions and relief schemes; and
- the forms of assistance available if the customer is unable to pay their energy bills due to financial difficulty.
Also, Body Corporates must provide the above information to existing customers as soon as practicable after NERL commences in Queensland, but not later than three months after that date (ie. by 30 September 2015).
Other conditions include the following:
- Body Corporates must notify customers of changes in tariffs as soon as practicable, but no later than the customer’s next bill;
- Body Corporates must provide a means of contact for account inquiries and complaints that can be readily accessed by customers. Where a telephone number is provided, the charge for this call must be no more than the cost of a local call; and
- In the event of a dispute concerning the sale of energy, the Body Corporate must make reasonable endeavours to resolve the dispute and advise the customer of any right the customer has to access an external dispute resolution body.
For small customers:
- Bills must be issued at least once every three months and must include stated particulars;
- Due dates for payment must be at least 13 business days after bills are issued;
- Body Corporates must not charge tariffs higher than the standing offer price that would be charged by the relevant local area retailer for new connections;
- Late payment fees must be limited to costs reasonably incurred by the Body Corporate; and
- Body Corporates must maintain certain records for each of their customers.
For residential customers:
- Body Corporates must offer flexible payment options to customers in financial difficulty and must direct them to certain information sources;
- Late payment fees must not be charged to customers who are unable to pay their energy bills due to financial difficulty; and
- Body Corporates must follow a defined procedure, involving a series of notices, before they can disconnect an energy supply to a customer.
Many Body Corporates on-supplying electricity to their customers will own, operate or control the private network used to distribute that electricity to customers within the site. The concept of a “private network” is broad and includes any privately owned wires, switches, meters, transformers or other electrical equipment used to supply electricity to a third party.
To avoid the costs and formalities associated with registering their network with the Australian Energy Market Operator (AEMO), most Body Corporates in this situation will want to obtain an exemption from this requirement. While this exemption is separate to the retail exemptions considered above, the same three-tier system of exemptions applies.
Exemptions for private networks are also subject to conditions.
What Body Corporates should do
In light of these new laws, affected Body Corporates should:
- where necessary, register or apply for a retail exemption (and private network exemption, if applicable) for each of their affected sites;
- prepare a new template disclosure document, incorporating the information which must be given to new customers;
- check their by-laws and any existing templates to ensure they are consistent with the conditions attaching to exemptions;
- develop a document to provide to existing customers, containing the mandatory information referred to above;
- alter their practices, procedures, manuals and billing templates, to ensure ongoing compliance with the new conduct requirements; and
- seek professional assistance, if required.
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