Submission to the Review of the General Exemption Order Issues Paper

Transcription

1 Submission to the Review of the General Exemption Order Issues Paper Executive Summary Clean Energy Council (CEC) welcomes the review of Victoria s regulatory framework for providers of solar power purchase agreements (solar PPAs or SPPAs) and solar leases. The Victorian regulatory framework for solar PPAs and solar leases is obsolete and has become a barrier to business. An exemption framework is the appropriate mechanism for authorizing alternative energy sellers in Victoria. Retail licensing of providers of solar PPAs and solar leases is unnecessary. The Victorian regulatory framework should be at least as simple and inexpensive as the approach taken under the National Energy Customer Framework (NECF). Key recommendations Retail licensing of providers of solar PPAs and solar leases is unnecessary. No other jurisdiction is Australia requires alternative energy sellers to obtain a retail licence or retail authorisation. Providers of solar PPAs and solar leases in Victoria should be regulated using either an individual authorisation exemption approach (as is the case in New South Wales, Queensland, South Australia, Tasmania and ACT) or using a class retail exemption approach (as has been proposed by the Western Australian Department of Finance). Note that the solar PV industry has developed an ACCC-approved Code of Conduct to address consumer protection issues in relation to standards of service and product quality and that the Code extends to providers of solar PPAs and solar leases. Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 1 of 6

2 Responses to Questions for Stakeholders Note that in this submission we have addressed only the questions relating to alternative energy sellers. 21. What is the appropriate mechanism for authorizing alternative energy seller models in Victoria, exemption or licence? An exemption framework is the appropriate mechanism for authorizing alternative energy sellers in Victoria. Retail licensing of providers of solar PPAs and solar leases is unnecessary. CEC concurs with the view of the Australian Energy Regulator (AER), that when an SPPA provider contracts with a customer to provide an additional service, an authorisation is not practical or warranted. Exemptions are a better regulatory fit for many kinds of alternative energy selling, including the sale of energy through SPPAs. No other jurisdiction is Australia requires alternative energy sellers to obtain a retail licence or retail authorisation. The National Energy Customer Framework (NECF) enables alternative energy sellers to do business using an authorisation exemption approach. The Western Australian Department of Finance Public Utilities Office (PUO) has recommended a class retail exemption for providers of solar PPAs and solar leases, subject to conditions regarding disclosure and reporting. CEC s supports the view of the PUO that, as this is an emerging market, without evidence indicating there is a problem requiring government intervention, there is no clear case for additional regulatory protections and monitoring through a retail licence. It is likely there will be increased consumer demand for arrangements such as SPPAs as consumers look for alternative means of accessing solar power without the costly initial outlay required to install a new system. As demand increases, the question arises as to whether to regulate this new type of business model. In practice, the cost of licensing under the current retail licence regime is likely to be prohibitive for prospective SPPA providers, and may restrict entry into the market In relation to SPPA providers, licensing is likely to result in increased regulatory cost without any clear benefit to consumers or industry. Until there is evidence demonstrating the existence of a problem that requires redress through regulation, the ACL [Australian Consumer Law] will be able to provide sufficient deterrents against unscrupulous behaviour, and provide adequate consumer protections to residential and commercial customers. Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 2 of 6

3 CEC endorses the PUO recommendations, which would: Allow for a class exemption for providers of solar PPAs and solar leases, thereby removing any requirement to apply for either a retailer licence or a retailer licence exemption; Require a product disclosure statement be given to all solar PPA customers; and Require SPPA providers to register with the PUO upon commencing its business and submit an annual summary report of its operations. This approach would reduce red tape for providers of solar PPAs and leases. CEC s Solar PV Retailer Code of Conduct includes best practice disclosure requirements for solar PPA providers. CEC recommends the Victorian Government consider the approach proposed for WA, using a class exemption approach with mandatory product disclosure requirements based on the best practice approach described in the CEC Solar PV Retailer Code of Conduct. 22. What are the regulatory barriers to the establishment of Alternative Energy Sellers? Victoria s approach to regulating the alternative energy selling industry is heavy-handed and dysfunctional. Victorian regulations are the main reason why the alternative energy selling business model has been so slow to take off in Victoria, compared with other states. It is part of the reason why Sydney has become the centre for innovation in solar financing and new business models while Victoria has languished. Victoria is losing investment and employment opportunities due to a moribund, unworkable regulatory framework. We concur with the ESC s concern that the current regulatory framework is limiting innovation, stifling competition and contributing to higher energy prices. The NECF regulates alternative energy sellers using an individual authorisation exemption approach. This approach provides appropriate regulatory oversight of alternative energy sellers. There are dozens of companies offering solar PPAs in NECF jurisdictions. In contrast, there are very few companies able to offer solar PPAs in Victoria. The main reason for the difference is the barrier to business created by Victoria s regulatory framework. The regulatory framework should not be replaced with something special and unique to Victoria. The Victorian Government has chosen not to adopt the NECF. It is incumbent upon Victorian policy makers to ensure that their regulatory framework is at least as simple and inexpensive as the NECF approach. Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 3 of 6

4 23. At what scale, and for which electricity activity, is an exemption appropriate? An exemption framework is appropriate for solar leases and for sale of electricity behind the meter using solar PPAs. There should not be a threshold in terms of system size. Solar leases and sale of electricity behind the meter using a solar PPA should be covered by an exemption framework, regardless of the size of the solar PV array. 24. If the Department were to grant an exemption to an alternative energy seller, what conditions should apply? To improve customer service and industry standards, the CEC established the Solar PV Retailer Code of Conduct in The Solar PV Retailer Code of Conduct includes guidelines for providers of solar leases and solar PPAs and represents best practice for the alternative energy selling sector. CEC recommends the Victorian Government consider the approach proposed for WA, using a class exemption approach with mandatory product disclosure requirements based on the best practice approach described in the CEC Solar PV Retailer Code of Conduct. CEC s Solar PV Retailer Code of Conduct is a voluntary scheme for retail businesses selling solar PV systems to households and businesses. It is authorised by the Australian Competition and Consumer Commission (ACCC). The Code aims to lift the bar higher than the minimum requirements set by government and regulations and bring about a better standard of service within the solar industry. When authorising the code in 2013, ACCC Commissioner Dr Jill Walker said: "The Code will allow for the regulation of retailers of solar PV systems to ensure that retailers maintain a standard that will benefit consumers and the industry. The Code will promote confidence in the PV sector by giving information to consumers to assist in purchasing decisions. The Code will also promote compliance by PV retailers through sanctions and public reporting mechanisms." The CEC manages the code of conduct and ensures that signatories comply with its strict requirements. To obtain approval, retailers must demonstrate compliance with all relevant consumer protection laws. There are a number of additional requirements including the demonstration of best practice pre- and post-sale activities; documentation; general business practices; and provision of a five-year, whole-of-system warranty. The independent Code Review Panel is headed by the CEO of the Consumer Advocacy Law Centre, Gerard Brody Further information about the Solar PV Retailer Code of Conduct is available from the CEC web site at The Code applies to the sale of solar PV systems, solar leases and solar PPAs. Approved Retailers (ie, signatories to the Code of Conduct) are required to clearly provide accurate information about the total Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 4 of 6

5 cost over the financing term of solar PV systems sold under finance arrangements including, without limitation, leases and solar PPAs. When advertising, or offering to a consumer, a finance arrangement that provides an alternative to initial outright purchase, Approved Retailers are required to provide the following information in their contracts of sale: the name of the lender to whom the consumer will be contracted; a clear statement that the periodic payments are available only if the consumer wishes to take advantage of the finance model; the comparative cost of that same product if the consumer was to purchase it outright on that day; a clear statement that fees and charges apply in relation to the finance arrangement, including: o the dollar amount of fees and charges applied under the finance arrangement and what each fee and charge represents; o whether the fees are fixed and, if not, details of escalation rates; and o where and in what form the consumer can expect the fees and charges to appear in the finance contract; under a solar leasing offer, the aggregate amount payable over the life of the financing term; under a PPA, the aggregate amount over the financing term based on a reasonable and stated estimate of the solar-generated electricity consumed by the consumer; details of any exit payments or penalties associated with the finance arrangement; a statement as to whether the consumer owns the system at the conclusion of any plan or agreement under the terms of the finance arrangement and/or details, including any associated costs and/or fees, of any option or options available to the consumer to purchase the system at the end of the term; and a statement that questions and complaints about the finance arrangement should be directed to the lender with whom the consumer is or will be contracted and, where relevant, to the Australian Securities & Investments Commission or the financier s external dispute resolution provider. It is our understanding that credit providers operating in Australia are governed by the National Consumer Credit Protection Act 2009 (Cth) ( the NCCP Act ). Under the Code of Conduct, Approved Retailers must make reasonable enquiries as to whether the lender (ie. the finance company to whom it is introducing consumers) is a credit provider as defined by the NCCP Act. If the finance company is not or states that it is not a credit provider as Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 5 of 6

6 defined in the NCCP Act, the Approved Retailer must ensure that the relevant contract includes a provision substantially in the following form: The consumer acknowledges that the lender is not, or may not be, subject to the National Consumer Credit Protection Act 2009 (Cth) ( the NCCP Act ) and accordingly the consumer may not have the benefit of the statutory protections afforded to consumers under the NCCP Act including, without limitation: o access to the services of the Financial Services Ombudsman; o access to dispute resolution services; o access to a streamlined court procedure for small claims; o a right to seek compensation; o applications for hardship variations or stays of enforcement; and o receiving information from the Credit Provider when a consumer defaults on their contract or a debit is dishonored. This clause would need to be signed by the consumer as an acknowledgment that the consumer is or may be waiving certain statutory rights. References Australian Energy Regulator (2014), AER Statement of Approach: Regulation of alternative energy sellers under the National Energy Retail Law Essential Services Commission (2015), Modernising Victoria s Energy Licence Framework: Issues Paper Government of Western Australia Department of Finance Public Utilities Office (2015), Retail licence exemptions for Solar Power Purchase Agreements: Draft Recommendations Report Clean Energy Council Submission to the Review of the General Exemption Order Issues Paper Page 6 of 6