Alinta Energy3 August 2011

Dear Mr Sarcich

DISCUSSION PAPER - VICTORIA-SPECIFIC REGULATORY REQUIREMENTS UNDER THE NATIONAL ENERGY CUSTOMER FRAMEWORK

Alinta Energy (Alinta) appreciates the opportunity to provide comment on the Department of Primary Industries review of the existing Victorian regulatory framework for energy distribution and retail activities against the proposed National Energy Customer Framework (NECF).

Alinta has over 2000 MW of generation facilities across Australia and New Zealand, and maintains over 600,000 retail energy customers in the Western Australian market. Alinta is progressing its growth strategy which will see it expand its retail business into the national energy markets. In this regard, Alinta received a licence to retail electricity in South Australia on 6th July 2011. Consequently, Alinta has a direct interest in the outcome of both the NECF, and State specific requirements, regarding the customer framework in energy markets.

One of the principle aims of the NECF framework is to remove the regulatory inconsistencies that increase the cost of compliance to retailers operating across jurisdictions. Alinta's preference is that unless there are both clear benefits to consumers, and that consumers in Victoria have specific requirements relative to other jurisdictions, then the arrangements for the NECF should be mirrored in the Victorian Market.

While Alinta acknowledges differences in the Victorian energy market may warrant the introduction of further statutory protections to those included in the national framework (eg to support the smart meter roll out), it is concerned that a number of the proposed Victoria-specific regulations provide an extra layer of obligations upon retailers which have not been supported by a cost benefit analysis.

Alinta's business model to retail energy to customers in NEM jurisdictions is to be based upon harnessing operational efficiencies within its business and customer service systems, allowing Alinta to offer affordable energy to consumers across multiple jurisdictions. A single national regulatory regime allows the Alinta business to offer its products across jurisdictions while developing its key systems subject to a single compliance regime. Increases in compliance costs as a result of duplicated regulatory requirements are borne by retailers, and are ultimately passed through to consumers.

In relation to the proposed Victorian derogations, Alinta is particularly concerned about the following:

  • retailer fees and charges on standing contracts, that is, prohibiting late payments fees and charges for merchant service fees;
  • continuation of the 2 month billing cycle for gas;
  • specific energy efficiency requirements in addition to the comprehensive NECF hardship policy;
  • the continuation of wrongful disconnection payments to customers; and
  • customer disconnection timeframes.

While Alinta is supportive of maintaining obligations against all of the above matters to ensure an adequate level of consumer protection, Alinta believes each of these items have been adequately addressed in the NECF framework. Any derogation from the NECF should result in consumer benefits which are outweighed by the costs of retailers managing additional requirements. There appears to be no justification for Victoria to move away from the NECF on the above matters.

Should you wish to discuss any of the above comments, please contact me on 08 9486 3762.

Yours sincerely

Michelle Shepherd

General Manager Regulatory Affairs

Alinta Sales Pty Ltd