TRU energy9 August 2011

Dear Ms Dempsey

RE: Extending the jurisdiction of the Energy and Water Ombudsman (Victoria)

TRUenergy welcomes the opportunity to provide the following comments in relation to the Victorian Government's consultation on the Extending the jurisdiction of the Energy and Water Ombudsman (Victoria).

On face value TRUenergy understands why the Victorian Government is proposing to extend the Energy and Water Ombudsman Scheme of Victoria (EWOV) to include exempt sellers. As outlined in the discussion paper the current mechanism for resolving disputes involving exempt sellers is problematic. Equally, as energy retailers are required to be members of the EWOV scheme, TRUenergy considers it fair that exempt sellers are also obliged to be members of a dispute resolution scheme as well. The expertise EWOV has gained in conciliating disputes on behalf of energy customers and types of issues also makes it suitably qualified to take on this additional function.

TRUenergy does however have some important concerns which it feels should be addressed if the proposal is to be progressed. In the consultation on the AER's Exempt Selling Guideline, it was clear that little was known about the number and scale of exempt seller businesses in any of the States, as no analysis had never been conducted. Because of this, TRUenergy is unsure how the Victorian Government will enforce the requirement that these companies have their disputes resolved through EWOV given there is not an equivalent licensing mechanism that exists for retailers. TRUenergy would argue that without the appropriate measures to ensure compliance with this requirement there is little point in progressing the proposal.

The other issue TRUenergy has with the extension of EWOV to include exempt sellers is the funding structure that will be used to recover the costs for extending the scheme to include exempt sellers. Such a cost recovery structure will need to balance the need to ensure EWOV's costs are covered and the capacity of exempt sellers to pay such fees. It should be noted that the size of exempt selling businesses range from the small caravan park or retirement village, to the very large shopping centres and residential complexes. Because of this TRUenergy is of the view that it could be difficult to determine what is reasonable to charge exempt sellers to have a dispute conciliated by EWOV. TRUenergy is deeply concerned that retailers will end up having to cover the costs of this inclusion of exempt sellers and believes if the Victorian Government proceeds with this proposal it provides an undertaking that existing EWOV members do not end up funding the resolution of exempt seller disputes. It should be noted that in NSW where exempt sellers are part of the Energy and Water Ombudsman Scheme of NSW one exempt seller was dismissed for not paying their fees.

In order to facilitate the extension of the scheme to include exempt sellers TRUenergy believes a study should be undertaken to determine the appropriate cost recovery model. As well as this TRUenergy considers that a further review should be undertaken after two years if the proposal is implemented, to reassess the cost recovery methodology.

Should you have any questions in relation to this submission please call me on (03) 8628 1185.

Yours sincerely

Alastair Phillips
Regulatory Manager

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