Rule Change: Open

Overview

On 6 May 2020, the Australian Energy Regulator (AER) submitted a rule change request to the Commission seeking to allow retailers to defer the payment of network charges for customers affected by the COVID-19 pandemic for six months. 
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On 6 May 2020, the Australian Energy Regulator (AER) submitted a rule change request to the Commission seeking to allow retailers to defer the payment of network charges for customers affected by the COVID-19 pandemic for six months. 

The AER has proposed the delay in response to the impact of COVID-19 on some customers’ ability to pay their energy bills and the associated impact on retailers’ cash flows. The AER suggests that the proposed deferral mechanism would provide necessary cash flow relief to retailers, ensuring they can focus on the ongoing supply of electricity and appropriate customer support and reducing the risk of multiple retailer failures during this period. 

Consultation paper

On 28 May 2020 the AEMC published a consultation paper seeking feedback on the proposal. Key issues the Commission are seeking feedback on include:

  • How has COVID-9 impacted retailers’ cash flows?
  • Which retailers and customers should be eligible to access the proposed deferral mechanism and how should this be determined?
  • What is an appropriate timeframe for the proposed payment deferrals?
  • How would the proposed payment deferrals be implemented in practice?
  • What would be the financial impact of the proposed deferral mechanism on NSPs?

The Commission request that submissions to the consultation paper use the template provided and include as much evidence as practicable of the impact of COVID-19 and of the proposed deferral mechanism. Submissions to the consultation paper are due by 25 June 2020. However, given the expedited timeframes, early submissions are welcomed to facilitate thorough consideration of the issues within the expedited process.

Initiation of the expedited rule change process

The Commission commenced the rule change assessment under the expedited rule making process. The Commission considers this rule change request should be considered urgent as:

  • The COVID-19 pandemic has caused a severe economic downturn impacting consumers ability to pay their energy bills
  • The potential reduction in revenue is likely to cause financial stress for retailers and may lead to financial contagion in the energy sector, potentially impacting the effective operation of the wholesale exchange
  • The rule change proposal would defer costs for some participants under cash flow stress from COVID-19.

Any objections to the proposed urgent rule change process must be submitted by close of business 11 June 2020. Objections should relate to the use of the urgent rule change process, and not the rule change proposal itself.

Consultation paper stakeholder briefing

The project team held a briefing for all interested stakeholders on 1 June 2020. The slides from this briefing are attached here and a recording is available here.

The purpose of this briefing was to provide an overview of the consultation paper and explain the rule change process.

Indicative Dates

  • 28 May 2020: Rule change process initiated on date of publication of consultation paper 
  • 1 June 2020: Stakeholder briefing
  • 11 June 2020: Objections close to proposed rule change process 
  • 25 June 2020: Submissions close to consultation paper
  • 23 July 2020: Final determination and or rule published.
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Documentation