The Australian Energy Market Commission is seeking submissions on a rule change request from the COAG Energy Council which seeks to allow electricity distributors to recover foregone revenue arising from a retailer insolvency event.
While the AEMC has assessed cost pass through arrangements in previous projects, this rule change request proposes to amend the cost pass through provisions in a manner that requires fresh consideration.
First, the rule change proposes the pass through of foregone revenue as well as costs, and second, it seeks the removal of the materiality threshold that is generally applied to other cost pass through events.
The effect of the proposal would be that the amounts that cannot be recovered directly from the insolvent retailer may be passed through, in full, to be recovered from the distributor’s customer base.
The rule change request seeks to make amendments to the National Electricity Rules relating to matters that were implemented under the National Energy Customer Framework. If made, the rule will only affect jurisdictions that have implemented this framework – NSW, ACT, SA and Tasmania.
It would also apply in Queensland from 1 July 2015, and potentially in Victoria from 31 December 2015.
The AEMC has published a consultation paper setting out a summary and background of the rule change request. It also identifies questions and issues to facilitate broader analysis and feedback on some key issues raised by the proposal.
Submissions are due by Thursday 11 December 2014.
For more information visit the project page at www.aemc.gov.au