Guideline on Approval of Standing Offer Prices
Final Guideline and Statement of Reasons on Approval of Standing Offer Prices
The Guideline sets outs the annual process under which the Regulator will adjust standing offer prices in line with the 2013 Standing Offer Determination.
After considering the comments made on the Regulator's draft Guideline, the Regulator released the final Guideline along with the Statement of Reasons on 29 April 2014.Draft Guideline on Approval of Standing Offer Prices
The Regulator sought comment on its Draft Guideline with respect to approval of standing offer prices in accordance with the 2013 Standing Offer Determination.
To assist stakeholders in this regards, the Regulator prepared a Consultation Paper on the draft Guideline.
Submissions closed on 11 April 2014.
Hydro Tasmania made the only submission on the draft Guideline.
Changes to 2013 Standing Offer Determinations (February 2014)
A number of minor amendments were proposed to the 2013 Standing Offer Determination that applied to Aurora Energy to rectify an unintended consequence arising from changes made to the regulatory framework as part of the May 2012 'Energy for the Future' reform package.
Since 1998, Aurora Energy has had approval to impose a late payment fee and interest on overdue accounts. However, an unintended consequence arising out of recent changes to the electricity supply industry's regulatory framework resulted in Aurora Energy no longer being able to impose these charges.
On 15 January 2014, the Regulator received a proposal from Aurora Energy to amend the Determination to allow it to impose these charges on the same basis as the Regulator had previously approved.
The Regulator reviewed Aurora Energy's Interim Price Regulated Retail Service Price Determination and proposed amendments to the Determination to reinstate Aurora Energy's ability to impose these charges on the same basis as was previously approved.
The Regulator released a Consultation Paper and a marked up copy of the Determination outlining the proposed changes to assist interested parties in making submissions.
The Regulator sought comments on its proposed amendments to the Determination. Submissions closed at 5:00pm on Wednesday 26 February 2014.
After considering the comments made in submissions, the Regulator published an amended retail electricity determination incorporating the proposed changes.
Changes to 2013 Standing Offer Determinations (December 2013)
On 26 September 2013, the Tasmanian Government at that time announced that it was deferring the sale of Aurora Energy's customer base and that retail competition would commence on 1 July 2014. Furthermore, from 1 July 2014, there would not be any restrictions on customer churn (customers switching between retailers) as was the case under that Government's previous policy position.
In response, the Regulator reviewed the 2013 Standing Offer Determinations it made in July 2013 to assess the impact of the policy change on those determinations.
As a result of this review, on 1 November 2013, the Regulator sought comments on its proposal to revoke the determination it made on 29 July 2013 in respect of Retailer B and to amend the determination it made on 29 July 2013 in respect of Retailer A. The Regulator prepared a Consultation Paper and a marked up copy of Retailer A's price determination and a clean copy of Retailer A's price determination outlining the proposed changes to assist interested parties in making submissions.
The deadline for submissions on the Consultation Paper and the proposed changes to Retailer A's determination was Friday 22 November 2013. The Regulator received submissions from:
After considering the comments made in submissions, the Regulator published an amended retail electricity determination and a Statement of Reasons explaining the changes made to Retailer A's and Retailer B's determinations.
2013 Standing Offer Determinations (July 2013)
The Regulator made its determinations on 29 July 2013. Links to the determinations are provided here: Retailer A Retailer B. The Regulator published a media release, the determinations and its Standing Offer Investigation Report on 30 July 2013.
As part of the May 2012 "Energy for the Future" reform package, retail competition were to be introduced from 1 January 2014. As part of these reforms, Aurora's customers were to be offered for sale in two separate bundles during the second half of the 2013 calendar year.
When retail competition commenced all residential and small business customers would have the option of entering into a market retail contract with one of the retailers who acquired a bundle of Aurora's customers. As is often the case in other jurisdictions where retail competition is in place, regulated or standing offer prices were to be available for those customers choosing not to enter into a market retail contract. In this case, the Government at that time required the Tasmanian Economic Regulator to determine standing offer prices for each block of customers that were to be offered for sale.
The standing offer determinations made by the Regulator were to apply for the interim pricing period 1 January 2014 to 30 June 2016. Two determinations were required, reflecting the intention at that time to sell Aurora's existing customers in two separate bundles. As the two retailers were not known at that time, the Regulator's determinations would refer to Retailer A with respect to Customer bundle 1 and to Retailer B with respect to Customer bundle 2.
Ordinarily, an existing retailer would make a submission so that the Regulator has sufficient information to be able to conduct its investigation and to make its determination. However, as Aurora was not expected to be an electricity retailer from 1 January 2014, and as the acquiring retailers would not be known until later in the 2013 calendar year, the Government at that time made the required submission to the Regulator.
The Regulator received a covering letter from the Minister for Finance and the Government's submission on 12 June 2013. The Government's submission was accompanied by a Retail Price Submission prepared by Ernst & Young for the Department of Treasury and Finance.
On 18 June 2013, the Government at that time advised the Regulator that Ernst & Young's Retail Price Submission contained an error. Details of the error are outlined on the last page of Ernst & Young's revised Retail Price Submission
Under the Electricity Supply Industry (Pricing and Related Matters) Regulations 2013
, it was left up to the Regulator to decide how the investigation should be conducted. However the available timeframe did not give the Regulator sufficient time to be able to consult with stakeholders as it would have strongly preferred to.