In November 2014, Gas Industry Co issued a Draft Decision Paper which sought stakeholder feedback on the proposed framework for insolvent retailer arrangements.
The framework proposed in this Paper had three elements:
Amendments to the Switching Rules that:
- define what insolvency means in this context;
- prescribe the contents of a data exchange file format;
- enable the industry body to request information from the insolvent retailer; and
- allow the industry body to transfer vacant and inactive ICPs whose responsible retailer, as listed in the registry, is no longer trading.
Drafting Instructions for backstop regulations that:
- are based on the previous insolvency regulations; but
- are written more generically, to allow them to be tailored to a specific insolvency situation; and
- reflect the suggestions and discussions in the Insolvent Retailers Working Group (IRWG) meetings regarding transferred terms and conditions, the identification of recipient retailers, and the transfer of transmission capacity.
Amendments to the Reconciliation Rules that:
- clarify that a retailer’s obligations to provide allocation data survive that retailer’s exit from the market, either through insolvency or other reason.
The amendments to the Switching Rules and Reconciliation Rules were implemented following the release of the Final Decision Paper. The drafting instructions will be utilised only if, and when, any gas retailer insolvency occurs, on recommendation by Gas Industry Co under section 43P of the Gas Act.
Background
Following the repeal of the Gas Governance (Insolvent Retailers) Regulations 2010 to address the failure of gas retailer E-Gas, Gas Industry Co embarked on a policy development process to identify the problems created by retailer insolvency, evaluate possible options in response, and determine a preferred approach.
Previous work identified that the preferred approach for managing instances of retailer default is to be prepared but flexible: that is, not to have standing regulatory arrangements in place (which could prove unsuitable for managing the particular details of a retailer insolvency), but to be prepared with drafting instructions for regulations that could be tailored and implemented under urgency in the rare circumstances they were needed. On 17 September 2013, the Minister endorsed this proposed approach.
The proposals in this Paper were developed with assistance and input from the Insolvent Retailer Working Group (IRWG).