1 August 2011

Dear Ms Dempsey


In 2006, the Essential Services Commission of Victoria (the Commission) undertook a review of the electricity exemption framework that culminated in the delivery of a final recommendations report to the then Minister for Energy Industries in March 2007.

I believe that the information gained by the Commission from this review is relevant to the issues raised in the Department's discussion paper on the possibility of extending the jurisdiction of the Energy and Water Ombudsman (Victoria) (EWOV) to exempt bodies.

Therefore, the Commission offers the following responses to Questions 1 to 7 raised in the discussion paper, which is most relevant to the findings of the Commission's 2007 review of exempt networks.

1. Most appropriate forum to resolve complaints between exempt bodies and customers

The Commission maintains that EWOV is the most appropriate mechanism for resolving disputes between exempt bodies and their customers. As indicated in the Commission's draft recommendation report to the Minister, it was considered anomalous that customers of exempt bodies cannot access EWOV's services and instead must incur costs associated with accessing VCAT's processes.

In its final report to the Minister, the Commission reiterated its recommendation that exempt bodies be required to become members of the EWOV scheme and that these exempt bodies should then be required to advise their customers that they can access EWOV's dispute resolution services.

2. Advantages in having complaints heard by EWOV rather than VCAT

The obvious advantage in having complaints heard by EWOV is that it has the experience and expertise in resolving disputes related to the energy industry. Further, customers may find it less intimidating to have EWOV act as a conciliator, as opposed to have to front up to a tribunal.

3. Should exempt bodies be obligated to become members of EWOV?

As explained above (in response to question 1), the Commission considers EWOV the most appropriate body to handle disputes between customers and exempt bodies. Therefore, these entities should become members of EWOV to ensure that EWOV has Jurisdiction over exempt bodies. However the Department must ensure that all exempt bodies required to become EWOV members can be clearly identified and can be compelled to join EWOV if that action becomes necessary.

Further consideration should be given to ensuring that exempt bodies are represented on the EWOV Board.

4. Most appropriate model for funding the costs of resolving disputes raised by customers of exempt bodies

The Commission considered this issue in its report to the Minister and recommended that the cost of membership should be a fee-for-service arrangement with no annual membership fee. This approach would minimise the cost impact to exempt bodies of becoming members of the scheme but would also allow EWOV to recover the incremental costs of addressing issues arising from the new membership category.

The other advantage of the fee-for-service funding is that it would provide an incentive for operators to minimise their disputes with customers in order to minimise the cost of the fee. This, in turn, would minimise the impact on EWOV as EWOV would need to address fewer cases than might otherwise have been a case.

5. Should only certaIn classifications of exempt customers have access to EWOV

The Commission does not support access to EWOV being for only certain classifications of exempt customers. The Commission noted an imbalance in the obligation that required exempt entities to advise business customers of access to VCAT to resolve disputes, but this same obligation does not extend to residential customers. The Commission, therefore, recommended to the Minister that the same obligation applies to residential customers.

7. EWOV's avenue of enforcement

The Commission did not consider this Issue in its final recommendations report due to a lack of information about exempt entities. However, the Commission considered that an effective enforcement regime would be essential to ensuring compliance by exempt entities. The Commission remains of this view.

Please contact Phil Waren, Senior Regulatory Manager, Energy, on 9651 0289 if you have any questions regarding the Commission's submission.

Yours sincerely

Ron Ben-David


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