Three key collaborations to secure energy supply in Australia

Over the past week, Australian energy businesses have accelerated their responses to the challenges posed by COVID-19. Businesses, industry bodies and regulators are working together to support cooperation, coordination and information sharing between participants in the electricity, oil and gas industries. The purpose of these responses is to ensure the reliable and secure supply of energy and fuel so that businesses and households impacted financially by the pandemic are not left without essential inputs.

Three recent energy developments to be aware of are:

1. The Energy Network Relief Package – supporting struggling small businesses and households

On 2 April, Energy Networks Australia (ENA) announced a relief package for the 13 participating gas and electricity networks across NSW, Victoria and SA to support small business and residential customers:

• Small businesses that have had to temporarily close as a result of COVID-19 can apply for full network charge relief for the period 1 April to 30 June. Eligible small business customers are those that consume less than 40 MWh or 400 GJ per annum (based on 2019 consumption) and use less than 25 per cent of historical average consumption for the relief period.
• Small retailers will receive rebates for network charges of residential customers in default as a result of COVID-19 (those who are receiving government benefits from 1 April but were not before 1 March). Large retailers will benefit from a deferral of payment for those network charges until 30 September.
• No disconnection/reconnection fees will be applied before 31 July. Daily supply charges will not apply for small businesses that have temporarily ceased operation.

The full plan is available here. ENA will also work with the AER, the AEMC and AEMO on behalf of networks to assess the relative priorities of regulatory changes, for example, the expenditure required to implement Five Minute Settlement obligations. It may be that longer time frames and/or other forms of support are required for upcoming regulatory changes that require network investment.

2. Collaboration within energy industry to ensure reliable electricity and gas supply

On 3 April, the ACCC authorised (on an interim basis) the AEMO and participants in Australian gas and electricity markets to discuss and enter into contracts or understandings regarding the reliable supply of energy and the integrity of wholesale markets during the pandemic. The authorisation affects all levels of the supply chain across the East and West Coasts. It permits coordination that would otherwise potentially constitute cartel or anti-competitive conduct in light of the public benefit:

• Planning for/minimising disruptions to energy supply, e.g. by coordinating scheduling of repairs and maintenance
• Sharing information/entering into common arrangements in relation to essential employees and contractors to ensure there are sufficient personnel to maintain and operate energy infrastructure
• Sharing information about the availability of, or entering into arrangements to share:

• Essential inputs and consumables for energy production, generation, transmission, distribution and supply systems and other energy infrastructure
• Information about projects not essential for maintaining the safe, secure and/or reliable operation of energy markets, and deferring those projects; and
• Information to manage system stability from a technical perspective as a result of changes in system supply and/or demand, e.g. managing generation profiles.

A full list of participants is available here. It comprises almost the entire electricity and gas industry. The ACCC is also considering interim authorisation for broader conduct requested by AEMO. The ACCC is seeking input from stakeholders, particularly smaller participants, now and over the coming weeks on that broader application.

3. Collaboration across fuel industry to ensure security of fuel supplies

Also on 3 April, the AIP and its members including some Australian subsidiaries , were granted interim authorisation by the ACCC to discuss and put in place measures to ensure fuel supplies remain available during the pandemic, and after the economic shutdown ends. The interim authorisation also applies to arrangements between AIP members and suppliers of crude oil and refined fuels, importers, suppliers of storage facilities and trucking or delivery services and wholesalers. Discussions, contracts or understandings are permitted if they have the purpose of:

• Ensuring the security of supply of fuel to Australian businesses and consumers
• Minimising the risk of shortages by coordinating scheduling and supply chain activities including import, storage, trucking and delivery of fuel products (e.g. coordinating the redirection of import vessels to where they are most needed)
• Maintaining or increasing supplies
• Facilitating the efficient use of refining capacity and capability, and fuel storage capacity, in Australia

The approval does not allow fuel companies to coordinate any element of pricing. The ACCC will continue to closely monitor retail petrol prices across Australia and address excessive pricing or illegal behaviour.

If you have any questions about the practical impact of these developments on your business, or the industry more broadly, please get in touch.