• Improving the effectiveness of the Electricity Generation and Retail Corporation Regulatory Scheme

    The Public Utilities Office has reviewed recommendations made by the Economic Regulation Authority (ERA) in its 2016 Report to the Minister for Energy on the Effectiveness of the Electricity Generation and Retail Corporation (EGRC) Regulatory Scheme.

    The EGRC Regulatory Scheme was introduced in response to the merger of Verve Energy and Synergy on 1 January 2014, to mitigate the potentially adverse effects of the merger on competition in the Wholesale Electricity Market. The Scheme instruments require Synergy to:  

    • divide its operations into generation, retail and wholesale business units, and prepare separate financial statements for each on a quarterly basis.
    • establish transfer pricing arrangements for wholesale electricity supply trades between the wholesale and retail business units.
    • provide Standard Products, being fixed quantities of wholesale electricity supplies available for sale and purchase at published prices.
    • restrict the flow of commercial information between its business units relating to a generator or retail competitor.  

    A Directions Report outlining regulatory changes to address matters raised in the ERA Scheme review process has been endorsed by the Minister for Energy. The proposed regulatory changes include:  

    • A change to the maximum buy-sell spread for Standard Products from 20% to 15%, from 1 January 2020 to 31 December 2020, to allow assessment of the effects on Standard Product and customised product transactions.
    • A requirement for Synergy to publish the foundation transfer price mechanism and any replacements to the mechanism. This mechanism establishes the price of wholesale supplies used by Synergy to service non-contestable customers and contestable customer contracts established before the Synergy-Verve Energy merger.  

    The Scheme reviews conducted by the ERA are also to move from an annual process to every two years.

     Next Steps

    The Public Utilities Office is working to implement the proposed changes to the Scheme in accordance with the following implementation timeline.

    Activity Timing
    Minister for Energy makes required regulatory amendments to the Electricity (Standard Products) Wholesale Arrangements 2014 by Ministerial Order to adjust the maximum buy-sell spread. 
    Ministerial Order is published in the Government Gazette
    July 2019
    Exposure draft of regulatory changes for implementation of remaining Directions Report recommendations released for consultation August 2019
    Amending Regulations and Ministerial Order to give effect to the remaining recommendations are published in the Government Gazette September 2019

    Documents relating to the review process are available below:

    Last reviewed: 13 June 2019

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