Overview
The AER is undertaking a review of the retailer authorisation and exemption frameworks set out in the National Energy Customer Framework (NECF) to assess whether the current energy consumer protection framework remains fit for purpose in a transitioning energy market. The review forms part of the Energy Security Board's (ESB) consumer energy resources (CER) implementation plan to effectively integrate CER into the National Electricity Market. The AER is working closely with the ESB, Australian Energy Market Commission, and the Australian Energy Market Operator and is engaging extensively with industry and consumer groups.
The AER initiated the 'Review of consumer protections for future energy services', formerly known as the 'Retailer authorisation and exemption review' in April 2022, publishing an issues paper for public consultation. We received 31 public submissions to the issues paper. This feedback, along with input at various workshops, has supported the AER to progress the risk analysis of new products and services which is a key component of the review, and to develop reform options.
On 28 October, the AER published an options paper outlining three reform options. The AER's preliminary position is that the current regulatory framework will not be fit for purpose for the future energy market given the potential risks posed by new energy products and services and that many of these are unlikely to be captured by the current framework.
Background
Since the introduction of the NECF there has been substantial investment by customers in CER such as rooftop solar, batteries, smart appliances and electric vehicles, and this is expected to continue. This is giving rise to the emergence of new energy products and services which can unlock the value of these CER assets for both customers and the energy system. This review will consider how current issues with the authorisation and exemption frameworks are likely to be exacerbated in the energy market transition, how new energy services and products interact with the NECF and the essentiality of energy services to consumers, and what regulatory reforms may be required to ensure energy consumers continue to be adequately protected.
The need for this review was set out in the ESB's final advice to Energy Ministers in July 2021 as part of its Post 2025 market design reforms. National Cabinet endorsed the reforms set out in the final advice in October 2021. The advice provided recommendations across 4 key reform pathways to support a transitioning energy market, from one underpinned largely by coal fired generation to a market with more variable renewable energy.
One key pathway is Integrating CER and flexible demand which aims to effectively integrate CER into the National Electricity Market, with ESB analysis showing this could lead to $6.3 billion in benefits for consumers over the next 20 years. The 'Review of consumer protections for future energy services' is one of many projects being progressed under this pathway. The ESB is coordinating the activities under this reform pathway through the CER Implementation plan, which provides a three year roadmap setting out the technical, regulatory and market reforms required to integrate CER.