The Australian Energy Market Commission today commenced consultation on rule change requests received from AGL related to the retailer-distributor credit support requirements in the National Electricity Rules and National Gas Rules.

The Commission also announced it would consolidate the rule change proposals made separately by AGL and the COAG Energy Council to the arrangements which apply when an electricity retailer defaults on payments to a distribution business.

Under AGL’s proposal, retailers with a Standard and Poor’s, or equivalent, credit rating of BBB- or above would not be required to provide any credit support to distributors. Whereas a retailer with a credit rating below BBB- would be required to provide a level of credit support so that the distributor’s effective loss matches that of a retailer rated BBB-.

The COAG Energy Council requested the National Electricity Rules be changed to allow distributors to recoup their unrecovered revenue in relation to regulated services that have been provided, but remain unpaid by retailers upon a retailer default. It was also proposed that the pass-through of these amounts be approved by the Australian Energy Regulator without being subject to a materiality threshold.

To allow these complex and related requests to be considered together, the Commission has released a consultation paper for stakeholder feedback which considers the changes proposed to the National Electricity Rules in AGL’s rule change request alongside the broader issues related to retailer default which arose in the COAG Energy Council’s request.

In looking at the issues raised by the rule change proponents, the Commission will consider how best to manage the risks and costs associated with retailer default in the long term interest of consumers.

The consultation paper summarises the rule change requests and identifies a number of issues to facilitate public consultation and assist stakeholders in providing submissions on the rule change requests.

Submissions on the rule change request are due by Thursday 2 July 2015.

For more information:

Media: Prudence Anderson, Communications Manager, 02 8296 7800