Submission on the Proposal for a National Energy Consumer Advocacy Body

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1 Department of Energy and Water Supply Submission on the Proposal for a National Energy Consumer Advocacy Body Key Issues Queensland welcomes the opportunity to make a submission on the development of options for the proposed National Energy Consumer Advocacy Body. The Queensland Government believes that consumers need to have a greater voice in decision-making on issues that impact on energy prices. Consumers are a significant stakeholder but across the spectrum of consumers, varying needs are not well represented or effectively taken into account. However, there are already national consumer bodies, including the Consumer Advocacy Panel and the planned Consumer Challenge Panel. It is necessary to ensure that any further proposed energy consumer advocacy body does not simply replicate these existing bodies and their roles. Any new body must provide tangible outcomes for consumers and fill a gap in existing arrangements. In developing options for establishing a national advocacy body Queensland s key priorities include: Filling a gap in the market and focusing on areas where tangible benefits to consumers are likely to ensue. Equal representation of state interests, particularly in light of the strength of existing consumer advocacy groups in New South Wales and Victoria relative to Queensland. The ability of the advocacy body to attract the necessary skills and to build capacity of state and regional consumer advocacy bodies. The funding of the national advocacy body. Queensland has previously stated that it does not have the capacity to provide additional funding for the body.

2 Response to Issues and Questions raised for Consultation 1. Objectives and Guiding Principles It may be appropriate for the objective of a national energy consumer advocacy body to state that it has a greater emphasis on residential and small business customers, as these are the customers that do not currently have effective representation at the national level and have the least ability to advocate for their own interests. The proposed principles seem appropriate and would be supported. 2. Institutional Structure and Governance Framework It will be important to get a balance of skills in both the governing board of any national energy consumer advocacy body and the organisation itself. A skills matrix approved by the Standing Council of Energy and Resources (SCER) could ensure that the appropriate mix of skills is sought for the national advocacy body. There will need to be a mix of people with energy industry experience including technical expertise, consumer advocacy experience, regulatory experience and relevant governance experience. This will ensure that the body has the necessary credibility and independence. It is important that there is broad regional representation to ensure that specific issues relevant to each region are considered. Queensland is the most decentralised state in Australia, and has issues that are not shared with other jurisdictions regarding providing energy to consumers in very remote locations, and to large populations in regional centres. There needs to be direct communication between the organisation, including the board, and consumer representatives. This could include direct board membership of consumer representatives, but it will be important to ensure that there is broad representation. 3. Nature and Scope of the Advocacy Role The Queensland Government is concerned about the potential overlap between the proposed Consumer Challenge Panel and the proposed national advocacy body. Given that both are being formed at similar times it is important that their roles are clearly determined from inception. If a primary role of the national advocacy body is intended to be to influence the national regulatory process the relationship between the Consumer Challenge Panel and the national advocacy body is critical. 2

3 In addition to regulatory determinations, informed participation in Rule changes across the relevant energy legislation will also be important in improving the rigour of these processes. The Queensland Government also believes that a key role of a national energy advocacy body is the capacity building of advocacy within the energy sector, including in Queensland. Energy consumer advocacy is not as established in Queensland as it is in some other states and capacity building in the sector will allow energy consumers in Queensland to have effective advocacy on issues that affect them. It is also important that each jurisdiction benefits equally from the establishment of a national advocacy body and representation is not skewed towards those states with stronger existing advocacy groups. In this context it is noted that there are also potential overlaps with the work of the current Consumer Advocacy Panel, which seeks to fund and promote advocacy activities. It may be that the existing CAP function should be subsumed into any new, well resourced consumer advocacy body. Research is an important role in advocacy. This is recognised by the fact that the Consumer Advocacy Panel s primary role is to provide grants for advocacy and research. Effective advocacy requires complete and up to date data which allows an understanding of issues and informed argument. However, it is well recognised that there is currently a lack of underlying consumer data, including on consumer interests and expectations. Research should align with energy reform occurring in the energy sector, to facilitate consumer engagement and understanding in these processes. The national energy advocacy body should advocate on behalf of consumers by engaging in national network regulation processes, rule changes and market development activities and be in a position to share learning s across jurisdictions. This should include liaising with existing advocacy bodies to strengthen the accuracy, legitimacy and scope of work on targeted issues. The report to SCER on options for a national advocacy body should address the extent to which the national advocacy body will influence consumer interests and representation in the planning stage of network service providers, in line with the recent AEMC rule change on economic regulation of network service providers. As stated earlier, network costs, including the framework for how revenue for the network service providers is recovered, have been a significant driver in the increase in energy costs. If a national energy 3

4 advocacy body is to have any effect, it must be able to have genuine and authoritative input into regulatory decision making. The role of a national energy consumer advocacy body should primarily be concerned with the interests of small energy consumers, including residential and small business customers. Interests of large energy consumers are represented through peak bodies such as the Energy Users Association of Australia. It may be useful to have some involvement of or engagement with large energy consumers or their representatives to determine where the interests of large and small energy consumers are similar and where they differ, and take these viewpoints into consideration in proposals for change. Key priority areas of focus of the organisation should be clearly outlined and reviewed against progress. 4. Necessary Expertise Skills and Capabilities The expertise, skills and capabilities mentioned in the consultation paper are considered necessary for a national energy consumer advocacy body. Energy industry expertise will be needed, including technical and regulatory expertise as well as advocacy expertise. However, there is concern that there may be difficulty in attracting and retaining suitably qualified staff with the regulatory and technical expertise in the energy industry. Queensland s Independent Review Panel on Network Costs identified that the Australian Energy Regulator (AER) has difficulty in attracting and retaining suitably qualified regulatory staff and management, particularly in terms of salaries and employment packages. According to this report, this places the AER at a distinct disadvantage in dealing with the energy industry. However it is noted that the AER has received increased Commonwealth funding specifically to address this difficulty. The Consumer Challenge Panel will also require skills similar to those which will be required by the national advocacy body. It is therefore considered necessary that consideration be given to how the national advocacy body will attract and retain experienced staff with regulatory and technical expertise. 5. Financing and Budgetary requirements A national advocacy body should only be progressed if it is determined one is needed to address gaps in advocacy at the national level and it can be established that the body will provide tangible outcomes for consumers. The Queensland Government has previously stated that it does not have the capacity to provide additional funding for the establishment of the body. 4

5 The current funding allocated to the Consumer Advocacy Panel and the Consumer Challenge Panel and the roles of these panels need to be considered in light of establishment of the national energy consumer advocacy body. Identifying what additional functions will be necessary to achieve tangible outcomes for consumers and avoiding potential overlaps will be critical, particularly in determining funding requirements. Queensland notes that one option for funding is via an industry levy. Whilst a levy may provide a more secure form of funding, it should be noted that network service providers are incurring costs associated with new requirements for increased consumer engagement in developing network determination proposals and may see an additional cost incurred to fund an advocacy body as unnecessary. If the CAP functions are rolled into a new national advocacy body, it is considered important to ensure that the funding of regional advocacy efforts by the CAP (ie, dealing with regional and/or local issues) is not lost in a focus on national issues. If the Consumer Advocacy Panel, the Consumer Challenge Panel and the national advocacy co-exist, then there should be mechanisms put in place that will allow regular interaction between the bodies to ensure that energy consumers interests are effectively represented and duplication is avoided. Summary In summary, a national energy consumer advocacy body must address gaps in national consumer advocacy and not duplicate processes in place, such as the Consumer Challenge and Consumer Advocacy Panels. A national energy consumer advocacy body must not duplicate roles of other consumer advocacy bodies, including state based organisations, but should strengthen the work of existing bodies. The report to SCER on options for the establishment of a national consumer advocacy body must establish whether a national advocacy body will have the ability to attract and retain suitably qualified and experienced staff and set out how this will be achieved. If the case for establishment of a national energy consumer advocacy body is made, financing of the body should be justified in terms of material impacts for consumers. 5

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