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13 May 2011

Dear Raif,

Jemena Electricity Networks (JEN) appreciates the opportunity to comment on the issues and proposals in relation to transitioning energy customer contracts to the National Energy Customer Framework (NECF) in Victoria. JEN's response focuses on the issues of transitioning established distributor-customer contracts to the NECF.

In summary, our key messages are:

  • JEN supports the DPI's proposal to provide for a simple bright-line transition of customers from the existing deemed contracts to the NECF contracts.
  • JEN welcomes the DPI's proposal that distributors can continue with the existing negotiated contracts—that is, the negotiated contracts do not have to be altered or terminated following implementation of the NECF.
  • JEN considers that the Australian Energy Regulator (AER) approved connection offers should apply from the start of the NECF. Connection offers that have been issued before the NECF but not finalised should be honoured and therefore remain, unless the customer has requested to recommence the offer process.
  • JEN does not have any direct billing arrangements with customers for distribution services provided under a deemed distribution contract or a negotiated distribution contract. However, it has direct billing arrangements for reserve capacity and public lighting services.

JEN's response to the DPI's issues paper is set out in Attachment 1.

Yours sincerely,
Siva Moorthy
Manager Network Regulation

Attachment:

Jemena Electricity Networks' Response to DPI consultation — Discussion Paper –

Energy Customer Contracts (Victoria) Transition

Attachment 1: Jemena, Electricity Networks' Response to DPI consultation —

Discussion Paper – Energy Customer Contracts (Victoria) Transition

The National Energy Customer Framework (NECF) provides a national framework for 'non-economic' regulation. The Department of Primary and Industries (DPI) has issued a discussion paper on the Victorian energy customer contracts transition issues. It sets out some of the issues that arise from the process of transitioning to the NECF in Victoria.

Electricity deemed distribution contracts

JEN supports the DPI's proposal to provide for a simple bright-line transition of customers from the existing deemed contracts to the NECF contracts. This would cover the overwhelming majority of distribution contracts that are of the deemed kind.

Electricity negotiated distribution contracts

In addition to these deemed contracts, JEN has negotiated contracts – in the majority with large business customers – which operate to the exclusion of the provisions of the existing deemed standard connection contract dealing with the same matters.  JEN believes it is not practical to renegotiate these contracts in order to reflect the relevant NECF provisions because it will be costly and time consuming. Moreover, customers may not wish to renegotiate the contracts because they may not yield any additional benefit to the customer.

JEN welcomes the DPI's proposal that distributors can continue with the existing negotiated contracts—that is, the negotiated contracts do not have to be altered or terminated following implementation of the NECF. Parties to a negotiated contract should decide when to renegotiate the contract.

How customers who are in the process of procuring new connections to premises be treated in the transition?

The discussion paper notes that distributors may have entered into contracts for new connection works. The DPI proposes not to make any specific provision for these contracts in the NECF transition process. JEN supports this position.  JEN considers that the AER approved connection offers should apply from the start of the NECF and those connection offers which have been issued before the NECF start date but not finalised should be honoured and therefore remain, unless the customer has requested to recommence the offer process. In most cases, the connection offers are valid for a period of three months. To reissue connection offers after the NECF start date would unduly delay the connection offer and acceptance process.

Energy only contracts

At present JEN does not have any direct billing arrangements with customers for distribution services provided under a deemed distribution contract or a negotiated distribution contract. However, it has direct billing arrangements with a few customers for reserve capacity and public lighting services.  A reserve capacity service is an additional service to the normal distribution service.  It involves the provision of a standby supply feeder for higher supply reliability and they are covered by a negotiated contract in addition to the distribution contact.  Charges for reserve capacity are billed directly to the customer by JEN. JEN expects the reserve capacity contracts to continue along with the negotiated distribution contracts, until such time the parties agree to change the service arrangements.  Customers with reserve capacity still get billed the normal way via the retailer for their distribution services.

Public lighting customers (municipal councils and VicRoads) are direct billed for public lighting services. Public lighting services include the operation, maintenance and replacement (OMR) of public lights. This service is in addition to the distribution services. The OMR charges are billed directly to the public lighting customers by JEN. The distribution service charges are billed the normal way via the retailer to the public lighting customers.

JEN does not consider these arrangements pose any issues in transitioning to the NECF.