AGL recently responded to the Australian Energy Market Commission's (AEMC) consultation on the Draft Determination for Bill Contents and Billing Requirements (Draft Determination).

The AEMC’s preferred approach under the Draft Determination was to give the Australian Energy Regulator (AER) the power to make mandatory guidelines to impose regulatory obligations on retailers regarding bill contents and requirements. In the Draft Determination, the AEMC claimed that this approach will allow for a minimum floor on key billing requirements, while also allowing for innovation and investment by retailers. However, the current proposed scope of the AER guideline making power would cover nearly all elements of the current National Energy Retail Rule (NERR) 25(1), and therefore could allow the AER at any point to implement prescriptive requirements to prevent or undo retailer investment and innovation.

AGL advocates for outcomes-based regulation, where a clear billing objective and principles are placed into the NERR to apply to retailers, negating the need for an AER guideline. This approach can provide regulatory certainty for retailers, while resulting in positive consumer outcomes in relation to clear, timely and accessible information relating to their bill. This is similar to the approach undertaken in the United Kingdom, and has demonstrated positive consumer outcomes to-date (including a 73% comprehension rate by consumers).

As the Rules maker, we believe it is important for the AEMC to ensure a thorough assessment of potential policy solutions to minimise the degradation of market roles between rules maker and rules enforcer. We do not believe the AEMC has adequately evaluated the full costs and benefits and various options on simplifying current billing regulations to improve consumer experience and comprehension of their energy bills. In particular, we are concerned that the more preferable rule proposed will result in significant costs to retailers due to the broad drafting of the AER guideline making powers and there has been a lack of assessment of these costs against the benefits of the preferred rule. We believe there is an opportunity for a more detailed and evidenced-based analysis of potential options for amending billing requirements and recommend the AEMC consider applying billing principles directly on to retailers, instead of requiring a guideline. 

AGL’s submission on the Draft Determination is set around four key themes:

  1. Feedback on the AEMC analysis to meet the National Energy Retail Objective (NERO), and that more evidenced-based analysis needs to take place.
  2. Matters relating to the assessment of the proposed approach, in particular issues with scope and the potential costs and implementation issues that can result.
  3. Matters relating to the increased use of AER guidelines, including the need for a consistent set of rules and considerations (e.g. a cost benefit assessment) for AER guidelines.
  4. Matters relating to the specific drafting of the Australian Energy Market Commission’s (AEMC) draft rule, and recommendations for amendments.

Finally, if the AEMC proceeds with their preferred rule change, we note that the proposed implementation period of three months for retailers, is insufficient. Under the current drafting the AER would have scope to change all aspects of the current bill, while it is unclear whether this is their intention, the AEMC should proceed with an assumption of complete amendments, which would require at least a 12 month implementation period following the final guideline.

You can access our full submission here.