The Australian Energy Market Commission will consider how the impact of retailer insolvencies can be best managed by electricity and gas distributors, having received two separate rule change requests from the COAG Energy Council and AGL.

The COAG Energy Council has requested the National Electricity Rules be amended to allow distributors to recoup their unrecovered revenue in relation to regulated services that have been provided, but remain unpaid by retailers that have become insolvent. It also proposed that the pass through of these amounts be approved by the Australian Energy Regulator without being subjected to the materiality threshold usually applied to cost pass through events.

The request from AGL seeks to amend the credit support provisions set out in both the National Electricity Rules and National Gas Rules to base credit support provided by retailers on a percentage of their network charges liability in a way that each retailer’s effective loss matches what would be provided by a bare investment (BBB¯̅ grade) retailer. AGL has also requested that the credit support provisions allow for a distributor to call on a bank guarantee for the full network charges liability in the event that the retailer is consistently late in paying bills or where AEMO makes a claim for credit support from the retailer.

To allow these complex and interrelated requests to be considered together, the AEMC has extended the time to make a draft rule determination for the retailer insolvency costs pass through rule change request to 18 February 2016.

For information contact:

AEMC Director, Meredith Mayes (02) 8296 7800

Media: Communications Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817