To gain greater insights into the factors driving higher retail electricity prices in Victoria, we asked SKM-MMA to model retailers' costs and margins.

The SKM-MMA Retail Margin for Residential Supply Report is accompanied by two papers we produced: the Electricity Retail Margins Discussion Paper, which summarised the supply report's analysis, and the Electricity Retail Progress Competition Research Paper, which reported on the progress of electricity retail competition in Victoria.

In 2013, the Victorian Government introduced flexible pricing of electricity made possible by the roll out of ‘smart meters’. The Advanced Metering Infrastructure Order in Council 2013 provides for some new customer protections and other arrangements for the introduction of flexible pricing later in 2013.

Following review of related instruments, we released our Changes to Regulatory Instruments Relating to Flexible Pricing: Final Decision.

One of our statutory functions is to administer the licensing of energy retail, distribution, transmission and generation activities. Licensees are required to comply with the conditions of their licences and other obligations, to monitor their compliance and to report compliance breaches. We may require licensees periodically to undertake independent audits of their compliance with their obligations.

In mid-2013, this program of energy retail audits was extended to licensed energy distribution businesses and outlined our role in enforcing certain obligations related to an advanced metering infrastructure (AMI) rollout. 

We produced several resources that support the framework

In April 2013, we started a consultation on the framework. We published our final decision and the revised Guideline 22: Regulatory Audits of Energy Businesses (which has now been superseded by the Audit Guideline for Energy Businesses). We also finalised the revised Tripartite Audit Deed.

We continue to appoint suitably qualified organisations to our energy audit panel. 

The Clean Energy Legislation (Carbon Tax Repeal) Act 2014 requires retailers to pass on to customers all cost savings resulting from the repeal of the carbon tax. We consulted with retailers a standing offer tariff variation that enabled them to introduce a carbon price-exclusive standing offer tariff.

On 18 June 2014, we released our position paper Variations to Standing Offer Tariffs Following The Removal of The Carbon Price. We invited submissions from stakeholders on our preferred option, which was to allow retailers to vary their standing offer tariffs one additional time to introduce a carbon price-exclusive standing offer tariff. This would not invoke enforcement action from us for potential regulatory breaches. 

We considered all submissions, and released the Variations to Standing Offer Tariffs Following the Removal of The Carbon Price: Final Decision. We also released a compliance statement outlining the procedures a retailer must follow if it decided to use the additional variation to introduce a carbon price-exclusive standing offer tariff.

On 4 February 2015, the Minister for Finance, in consultation with the Minister for Energy and Resources, asked us to inquire into best practice financial hardship programs of energy retailers.

We published our Supporting Customers, Avoiding Labels: Energy Hardship Inquiry Final Report, which outlined our findings. The final report is the result of extensive consultation with energy retailers and consumer groups. The report recommends a new framework with a set of clear and enforceable minimum standards that ensure those struggling to pay their energy bills have the right to assistance from their energy retailer.

In late 2015, we consulted stakeholders on a proposed Energy Compliance and Enforcement Policy to provide information to regulated energy businesses and other stakeholders on our proposed approach to compliance and enforcement in the Victorian energy market.

To facilitate the smooth implementation of the legislative reforms, and to provide industry with certainty as to when we may use our new and updated enforcement powers, we released an Interim Approach to Energy Compliance and Enforcement that modified our Compliance Policy Statement for Victorian Energy Businesses by replacing Chapter 4.

The interim approach applied for an 'interim period' from the date that the Act took effect (1 January 2016) until the date that the final policy was published.

We formally commenced our consultation on 27 April 2016 by releasing the draft policy and draft decision paper. Submissions closed on 25 May 2016. We received 10 written submissions in response to our consultation.

We published the final policy and final decision paper on 22 July 2016.

We reviewed codes affected by the Victorian 'guaranteed service level' payment scheme. The scheme requires Victorian electricity distributors to make payments to customers who receive a level of service worse than a specific threshold or level.

In December 2015, we:

• published our Victorian Electricity Distributors' Guaranteed Service Level Payment Scheme: Final Decision 
• amended versions of the Electricity Distribution Code and Public Lighting Code.

In September 2015, the Victorian Government asked us to examine the true value of distributed generation (electricity generated by sources including solar panels).

The inquiry involved two separate but related stages. The first looked at the energy value of distributed generation (the value of electricity generated from alternative sources, like solar power). The second stage looked at the network value (the value of the electricity to the network as a whole). In both stages, we looked at the economic, social and environmental benefits of distributed generation.

In 2016-17, we completed both stages of the inquiry, delivering recommendations to the government.  We received over 2500 submissions earlier in the inquiry (2015-16) and held public forums across Victoria including in Morwell, Shepparton and Moonee Ponds.

Discussion paper

On 29 June, we released a discussion paper for stage 2 (network value) of the inquiry for consultation. We received 14 submissions.

Draft report

On 15 November, we released a draft report for stage 2 (network value) of the inquiry. We received 13 submissions.

Draft report

On 6 May, the commission released a draft report for stage 1 (energy value) of the inquiry. We received 38 submissions and held a series of public forums around the state during the consultation period.

Unaccounted for gas (UAFG) is the difference between the measured quantity of gas entering the gas distribution system from various supply points and the gas delivered to customers. This review calculated new benchmarks for the calendar years 2018 to 2022.

The new benchmarks apply to Australian Gas Networks (formerly Envestra), MultiNet and AusNet Services. The benchmarks commenced when they were declared by the Minister for Energy in an Order published in the Government Gazette.

We consulted key stakeholders during this review

We completed our review of UAFG benchmarks in two stages. The first stage, which included a draft decision published on 22 May 2017 and a final decision published on 31 July 2017, involved consultation on the methodology to calculate the benchmarks.

The second stage, which included a draft decision published on 2 October 2017 and a final decision published on 18 December 2017, involved consultation on the calculation of the UAFG benchmarks.

We audit energy businesses to help us understand how energy businesses are complying with rules designed to protect consumers. If we detect problems through our audit program, we can investigate further and may take enforcement action. 

Who we audited

The 2018–19 audit re-examined five energy retailers’ compliance in 2018 following issues found in previous audits.

Retailers audited were:

• Alinta Energy
• Blue NRG
• EnergyAustralia
• Origin Energy
• Simply Energy

All retailers, except Blue NRG (a new retailer), were audited for the third time since 2016. 

Audit focus

The audits focused on some of our continuing priority areas including: 

• transferring customers without consent
• wrongfully disconnecting customers
• overcharging customers. 

These rules can be found in our Energy Retail Code of Practice. Electricity and gas retail licences require licensed retailers to comply with these codes. 
 

Key findings

The audits found repeat instances of potential non-compliance. You can find the full audit results here.

Our response

Through the audit process, we looked into why retailers were potentially non-compliant and recommended they take action to directly address the causes of potential non-compliance. 
 

We take all findings of potential non-compliance seriously, especially repeat findings. We continue to closely monitor energy business’ compliance and can take a range of compliance and enforcement actions in response to audit findings, including recommending the retailer to review and update its systems, retrain staff and improve record keeping. More serious findings may result in further investigation and enforcement action. 

Read more about our Compliance and Enforcement approach and priorities.
 

What about 2020?

Read more about who and what areas we are auditing in our current energy audit program.