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13 May 2011

Dear Mr Sarcich

RE: National Energy Customer Framework - Victorian Licensing Arrangements Issues Paper & Energy Customer Contracts (Victoria) Transition issues

TRUenergy welcomes the opportunity to provide the following comments in relation to the Department of Primary Industry's consultations on Victorian Licensing Arrangements Issues Paper & Energy Customer Contracts (Victoria) Transition issues.

TRUenergy supports the adoption of the NECF to replace the existing State retail energy codes. TRUenergy endorses the national authorisation of energy retailers and the abolishment of the licensing regimes for generation, transmission and distribution entities.

The commencement of the NECF in Victoria will result in retailers having to amend its customer contracts to ensure they are consistent with the rules, regulations and law. TRUenergy is of the view that this should be done in such a way as to minimise any inconvenience to customers.

Victorian Licensing Arrangements Issues Paper

In order to maximise the economic benefits and minimise regulatory burden TRUenergy strongly believes that States should not derogate from the existing NECF rules, regulations and laws. Where there is an identified need to implement State derogations TRUenergy would insist this is done in a consistent manner and ideally with the approval of the AER and other jurisdictions. TRUenergy supports the national authorisation of energy retailers but recognises that there will need to be some oversight of the regulations which end up outside the NECF. It is understood the Victorian Government's preference is for the AER to have regulatory oversight of such instruments; however TRUenergy would be interested in the government's approach to how such requirements will be administered where approval is not given. TRUenergy considers it is unlikely that a common approach towards the recasting of current regulatory obligations is possible and that the easiest way to address this would be to engage with industry once the complete list of proposed statutory obligations is known.

In the case of the licensing of generators TRUenergy believes that the Australian Energy Market Operator is the most appropriate body to oversee the registration of companies to operate generators connected to the National Electricity Market.

Currently retailers license fees contribute to funding the operation of the various agencies that oversee the Victorian energy markets. TRUenergy would be keen to understand what entities will need to be funded by the industry after the NECF is implemented and how these costs will be allocated.

Energy Customer Contracts (Victoria) Transition issues

Given the complexity of the changes associated with the NECF and the fact that the national framework should result in no significant lessening of customer rights, TRUenergy supports an approach to the transitioning of customers contracts in a manner which results in minimal disruption to customers.

Given the identified similarity of the NECF Standard Retail Contracts with the existing Standing Offer agreements TRUenergy believes the customers on Standing Offer contracts should be transferred automatically once the NECF is implemented in Victoria and forego any accrued rights in under their existing contract.

For small customers on market based contracts TRUenergy believes that Option C whereby existing contracts are allowed to continue, but will become invalid where they are inconsistent with the NECF is a sensible approach which will ensure minimal disruption to customers.

In terms of deemed customers TRUenergy believes that these contracts should transition automatically once the NECF is introduced given that there are adequate protections for these customers under the NECF.

As discussed at the recent public forum TRUenergy supports the Joint Implementation Group establishing an information campaign to educate customers about the NECF. Specifically TRUenergy is of the view that this should not involve any direct marketing of customers, but that a fact sheet informing customers about the high level changes associated with the NECF should be made available to customers online and who ring either the relevant energy department, the AER or former energy regulator.

TRUenergy recognises the issue of Retailer of Last Resort was raised for consideration in the Issues Paper but is of the view that the likelihood of such a retailer failure is minor and would be able to be worked through with the Victorian Government, the Australian Energy Regulator and the industry.

The transition to the NECF is being undertaken for the benefit of customers, governments and the energy industry. TRUenergy considers that the establishment of IT systems for the new framework by July 2012 will be challenging and would hope that initially some leeway is given to businesses as they become familiar with the new processes associated with the regime.

Yours sincerely

Alastair Phillips
Regulatory Manager

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