The Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (the Code) applies to all electricity retailers that supply to small customers in the applicable distribution regions of New South Wales, South Australia and south-east Queensland.
The Code sets a cap on standing offer prices and specifies how prices and discounts must be advertised, published or offered.
I. Introduction
The Code is an instrument made under the Competition and Consumer Act 2010. The Code:
Places a cap on standing offer prices: standing offer prices must be set such that, were a small customer to be supplied in a financial year at those prices with the amount of electricity determined by the AER for the financial year under Part 3 (the model annual usage), the total amount the customer would have to pay for the supply would not exceed the price determined by the AER under that Part (the reference price) (see section 10); and
Regulates the advertising of offers by requiring prices to be compared to the reference price: small customers must be told how prices for supplying electricity compare with the reference price (see section 12); and
Regulates the advertising of discounts: an advertisement for supplying electricity to small customers must not have a discount as its most conspicuous price‑related matter, and must state any conditions on discounts clearly (see section 14).
II. Operation alongside NECF
The Code, unlike the NERL and NERR, is a Commonwealth instrument. It is enforced by the ACCC rather than the AER and defines terms differently. In NECF jurisdictions, retail pricing is also regulated by the AER’s Retail Pricing Information Guidelines.
For example, a small customer is defined in the Code to be a customer with or without controlled load who uses electricity principally for personal, household or domestic use. A small customer is also defined to include a small business who uses less than 100 MWh per annum who is not charged a controlled load tariff or a flexible tariff.
The Code does not apply to embedded network customers, those with pre-paid meters or those whose supply includes a demand tariff. Further, solar Feed-in Tariffs are to be ignored for the purposes of calculations under the Code.
III. Subdivision A: Caps on Standing Offers
Where there is a reference price and model annual usage in force, a retailer must ensure that its standing offer is at or below that reference price.
The Code says that: ‘The standing offer prices comply with the price cap if the total amount a representative customer, who was a small customer of that type, would be charged for the supply of electricity in the region in the year at the standing offer prices would not exceed the reference price.’
IV. Subdivision B: Advertising
There are two ‘options’ for advertising, publications and offers that are subject to the Code.
Option 1: Advertising, publications and offers that are subject to the Code must:
a. Include the difference between the reference price and the unconditional price as a percentage of the reference price;
b. For each proportional conditional discount mentioned in the advertisement, publication or offer, include the difference between the unconditional price and the conditional price for the discount as a percentage of the reference price; and
c. Include the lowest possible price.
Option 2: The alternative to Option 1 is for a retailer to ‘state the total amount the electricity retailer estimates the small customer would be charged for the supply of electricity in the region in the year, assuming that the conditions on all conditional discounts (if any) mentioned in the offer were met.’
V. Advertising Conditional Discounts
Additional requirements apply to the advertising of conditional discounts. These are that:
a. The conditional discount must not be the price‑related matter that is mentioned most conspicuously in the advertisement; and
b. The advertisement must state the conditions on the conditional discount clearly and conspicuously.
VI. Key Terms
To understand these obligations, it is necessary to review the definitions of key terms used in the Code:
conditional price for a proportional conditional discount means the total amount a representative customer would be charged for the supply of electricity in the financial year at the offered prices, assuming that the conditions on the discount were met and disregarding any other conditional discounts.
lowest possible price means the total amount a representative customer would be charged for the supply of electricity in the financial year at the offered prices, assuming that the conditions on all conditional discounts (if any) mentioned in the advertisement, publication or offer were met.
proportional conditional discount means a conditional discount that is calculated as a proportion of all or part of the amount a small customer is charged for the supply of electricity at the offered prices.
unconditional price means the total amount a representative customer would be charged for the supply of electricity in the financial year at the offered prices, disregarding any conditional discounts.
