Australia mulls delaying network charges for electricity retailers

It is calling for stakeholder submissions by 25 June.

The Australian Energy Market Commission (AEMC) is considering an urgent request from the Australian Energy Regulator to allow electricity retailers to pay their network charges after 6 months, possibly with interest, according to a press release.

AEMC began a consultation process on the regulator’s proposal for electricity network businesses to share more of the burden from the pandemic by putting some network charges on hold for 6 months for retailers with pandemic-affected customers.

The regulator says the way electricity is supplied to households and businesses is under threat because of the risk of a large-scale, cascading retail failure or ‘financial contagion’ in the national electricity market.

“We know that retailers are facing increases in the level of non-paying and hardship customers while still paying for wholesale electricity and network access – which together make up nearly 80% of their costs. And they have been put on notice not to disconnect customers who are having trouble paying their bills because of COVID-19,” said AEMC chairperson John Pierce.

The commission is calling for stakeholder submissions by 25 June. A stakeholder briefing session is being held on 1 June.

Somik Das, power analyst at GlobalData, commented that the rule change would provide some breathing space to electricity providers, especially small retailers who are supporting financially challenged customers with easy repayment options or deferring payments to a later date.

“If several small retailers go out of business in a short period then other retailers in the market will come under pressure to serve larger numbers of financially troubled customers. This may also lead to an increase in electricity prices in the future as customers will be left with fewer options to choose from,” Das said.