Network Energy Services2nd August , 2011

Comments re – Discussion Paper – Victoria Specific Regulatory Requirements under NECF

Dear Raif Sarcich,

This submission has been prepared from a perspective of operators and residents of retirement villages and lifestyle villages that operate as exempt sellers and embedded networks in Victoria. Network Energy Services is the largest service provider for electricity on-selling in the proposed registrable AER exemption classes R3, and R2 where the site is a retirement village and a major service provider for R4 where the site is a manufactured home estate.

The role of Network Energy Services is to assist sites to become exempt sellers and then to manage the billing and operation of the exempt selling as a service provider to the exempt seller and embedded network operator. The role also involves an understanding and compliance with regulatory requirements.

Unfortunately we were not aware of the two DPI papers issued for comment in April 2011 which was remiss because it is important that the views of exempt sellers, embedded network operators and consumers in embedded networks are added to the submissions by licensed retailers, distributors, authorities and the representatives of special needs groups made in response to the April 2011 discussion papers.

Having now studied the Victorian Licensing Arrangements – Issues Paper and the Discussion Paper – Energy Customer Contracts (Victoria) Transition Issues our belief is that input from exempt sellers and embedded network operators to the discussion would have provided some necessary balance to that discussion.

We have considered the discussion paper –extending the jurisdiction of EWOV and have responded to that paper, and we have also considered the discussion paper – Victoria Specific Regulatory Requirements under NECF.

The latter paper has been well prepared and there appeared to be few items that would be of concern from the perspective of exempt sellers and embedded network operators.

We do remain very interested in Victoria Specific aspects of the introduction of the National Framework to our jurisdiction.

We have (and will) participated carefully in the development by AER of the NECF, NER and NEL and in particular we are very pleased that the AER has proposed different classes of registrable exemptions because it means that different situations may be assessed on their merits and in that context it is worthwhile to point out that exempt selling in class R3 (and similar situations) are extremely beneficial for consumers.

Where possible we encourage industry bodies such as the Retirement Villages Association (RVA) to be involved and assist them to respond as a means of contributing to the necessary broader perspective of industry issues.

The licensing exemption regime that has existed in Victoria has been well ahead of developments in that area in the other states and Network Energy Services and the RVA have been keen participants in the small scale licensing reviews as far back as 2006.

In these times when many discussion papers are presented by AER and DPI it is hard for industry operatives to find the extra time and resource to respond when appropriate however we recognize that it is necessary for us to participate so that balanced outcomes can be achieved and therefore I ask that DPI assist us to provide balancing perspectives by alerting us to issues that affect exempt sellers, embedded networks and customers of exempt sellers.

Our reading of the "Victoria Specific" discussion paper is in respect to exempt selling and embedded networks is that there is no divergence from the NECF and NER in matters relating to the jurisdictional legislation however the earlier Victoria Licensing Arrangements – Issues Paper raised a number of issues concerning exempt selling and embedded networks and I would like to feel more confident that the conversion for Victorian law will reflect the AER position that our sector has contributed to over the past year.

We do endorse the point 2.1 made in the current discussion paper relating to Division 2 – Price regulation because it is important that pricing benchmarks be available so that fair and transparent price guides are available to consumers and whilst the AER provisions should satisfy the need the ability within Victorian legislation for a reserve retail price could provide a solution if a deficiency becomes apparent in the marketplace.

Comment has been made in another paper regarding dispute resolution processes, EWOV and VCAT. We consider that the discussion paper has been well written and is comprehensive. We do ask that the perspective of exempt sellers and embedded network operators be invited in relevant matters in future papers in the interest of balanced consideration.

Dennis Etchells

Principal

Network Energy Services