Retail energy markets are the final link in the energy supply chain. Energy retailers buy electricity and gas in wholesale markets, package it with transportation services and sell it to customers. This is typically the main interface between the electricity and gas industry, and customers such as households and small businesses.
On 1 July 2012, the AER assumed responsibility for regulating retail energy markets in those states and territories that had adopted the National Energy Customer Framework (‘Customer Framework’). The reforms aimed to streamline the way that energy retail markets are regulated through a single framework enforced by the AER.
The Customer Framework includes the National Energy Retail Law, National Energy Retail Rules and National Energy Retail Regulations. Together, these Laws and Rules set out key protections and obligations for energy customers and the businesses they buy their energy from.
As of 1 July 2015, the Customer Framework has commenced in Queensland, New South Wales, the Australian Capital Territory, Tasmania and South Australia. In states that have yet to adopt the Customer Framework, state and territory governments will remain responsible for regulating retail energy markets. Western Australia and the Northern Territory do not propose to implement the reforms.
In jurisdictions where the Customer Framework has commenced, the AER is responsible for:
- monitoring and enforcing compliance with obligations in the Retail Law, Rules and Regulations
- reporting on the performance of the market and energy businesses, including information on energy affordability and trends in disconnection of customers for non-payment of energy bills.
- assessing applications for national retailer authorisations from businesses that want to become energy retailers, and granting exemptions from the requirement to be authorised (for example, for nursing homes and caravan parks that pay for energy and onsell it to their tenants as part of their normal business)
- approving policies energy retailers must implement to assist customers who are facing financial hardship and looking for help to manage their bills
- administering a national retailer of last resort scheme, which protects customers and the market if a retail business fails
The AER does not have a role in setting retail energy prices. In some states and territories, the government remains responsible for control of the energy prices customers see on their bills. For example, in Queensland, the ACT and Tasmania, you can ask for a contract with a regulated electricity price where the price is set by government. In Victoria and South Australia, there are no regulated offers or tariffs (for electricity or gas), which means that energy retailers set all of their own prices. The AER has developed an energy price comparison website, Energy Made Easy, to help customers find the best energy offers for their needs.
The AER has released procedures and guidelines for how it undertakes its roles under the Retail Law. It developed these documents in consultation with energy customers, consumer advocacy groups, energy retailers, state and territory agencies, ombudsman schemes and other stakeholders.
The Customer Framework also makes important changes to the National Electricity Rules and National Gas Rules for customers who need to connect their home or business to the energy network. See our Getting connected page for more information about the AER’s role in customer connections.
How was the Customer Framework developed?
The Customer Framework was introduced after extensive consultation by COAG Energy Council (previously the Standing Council on Energy and Resources).
Representatives from Queensland, New South Wales, the Australian Capital Territory, Victoria, Tasmania and South Australia worked together to develop a single set of rules that could be applied across the National Energy Market. (Western Australia and the Northern Territory will continue to operate under separate frameworks.) Information on how the Customer Framework was developed, including consultation papers, is available from the COAG Energy Council website.
The South Australian parliament passed the National Energy Retail Law (South Australia) Act 2011 in March 2011. The Retail Law is a schedule to that Act. The first Retail Rules and Regulations were made by the Governor of South Australia in June 2012.
In order for the Customer Framework to apply, each participating jurisdiction including South Australia needs to pass its own legislation adopting the Retail Law, Rules and Regulations. When they do this, a state or territory may choose to change the way that the Law or the Rules apply, for example by creating additional or different protections and obligations for customers and businesses in that State or Territory.
This also means that the Customer Framework will come into effect on different dates in different States and Territories. The AER’s new functions under the Customer Framework will start in each jurisdiction from the date the Retail Law and Rules take effect in that jurisdiction. Until then, State and Territory governments will remain responsible for regulating retail energy markets.
The National Energy Retail Law is Schedule 1 of the National Energy Retail Law (South Australia) Act 2011, which can be accessed from the South Australian Attorney-Generals' Department website. You can access the National Energy Retail Regulations from the same website.
The National Energy Retail Rules can be accessed from the Australian Energy Market Commission website.
The website also contains information on how the Retail Law, Rules and Regulations apply in each jurisdiction can be accessed.
Under the NERR the AER is required to establish and maintain a Customer Consultative Group (CCG). The purpose of the CCG is to provide advice to the AER in relation to its functions under the energy laws affecting energy consumers across participating jurisdictions. CCG meetings are held up to three times a year.