Submission by APG to the Energy Customer Contracts Transition Issues discussion

16th May 2011

Dear Mr Sarcich,

RE: Energy Customer Contracts (Victoria) Transition Issues Discussion Paper

Australian Power & Gas (APG) welcomes the opportunity to provide comments on the above mentioned discussion paper. At the outset we would state our view that any transition arrangements for customer contracts (assuming transition arrangements are required) should be such that there are minimal impacts from the transition arrangements for customers and retailers alike. We would question the need (and value) for prescriptive arrangements to be in place for the transition of existing contracts.

Over prescribing transitional arrangements will only add undue confusion and complexity to the NECF. Additionally there must be recognition of the approaches to be taken by other jurisdictions, an inconsistent approach to that of other jurisdictions will only add further complexity to the market transition.

The discussion paper outlines three potential approaches in dealing with the transition of customer contracts these being;

  1. Replace previous contracts with new contracts consistent with the NECF,
  2. Require retailer to renegotiate contracts with customers,
  3. Allow existing contracts to continue, however they would be invalid to the extent they are not compliant with the NECF.

APG supports the view expressed in the discussion paper that option 1 would be unnecessarily disruptive. We also believe that option 2 would be unnecessarily disruptive.

Our preferred option is for the natural transition of customer contracts where possible. Customer contracts with a fixed term would continue for the term of the contract and then naturally progress to the NECF as their term expires. That is customers would transition through the natural recontracting process.

For non-fixed term contracts (or evergreen contracts) there will still be a level of natural progression to new contractual arrangements under the NECF. This occurs as customers naturally transfer from one retail supplier to another.

Of the three proposed options APG is most supportive of option 3. In that existing contracts should be allowed to continue. Our view is that regardless of the existing contracts having elements that may be considered inconsistent with the NECF customers would continue to be afforded all the customer protection provisions and contract benefits that would otherwise be provided under the NECF.

We believe that a natural transition arrangement should be adopted for a defined period (18 months) and only after such a period has expired should alternative transitional arrangements be considered.

On the issue of dealing with disputes that may arise concerning the transition there are a number of actions that can and should be taken that would address the likelihood of issues arising.

To reduce the likelihood of issues the DPI should ensure customers have access to government funded information in the form of;

  • Detailed customer education campaign outlining the transitional change to the NECF,
  • Ongoing access to information (website etc.) that customers can refer too during the transitional phase,

This information should be in plain English and in easy to understand terms.

However should issues arise retailers should be afforded the first opportunity to address any issue or concern a customer may raise.

The suggestion that disputes be dealt with via the Energy & Water Ombudsman needs to be further explored. There are jurisdiction limitations to what the Ombudsman can and cannot undertake a review of. These jurisdictional limitations must be maintained as they are in place to ensure the ongoing integrity of the scheme.

If disputes are to be referred to the Ombudsman they must be dealt with in accordance with the scheme, this dictates retailers as having the first option to address a matter raised by a customer. Only after a retailer has had the opportunity to address an issue (and not been able to resolve the issue) should the matter be referred to an independent dispute resolution body.

APG would welcome the opportunity to discuss our submission further.

Yours sincerely,

Shaun Ruddy
Manager Regulatory & Compliance
Australian Power & Gas