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Contestable customers - Are you a contestable customer?

See also: When you become a contestable customer.

Customers who can choose their electricity retail supplier are called contestable customers. Qualification depends on the annual electricity consumption at a single site during a consecutive 12-month period after July 1998.

The tranches are defined by their minimum electricity consumption and dates introduced as follows:

Tranche	Date of Introduction	Minimum Annual Electricity Consumption per site (kWh)
1	1 April 2000	4,000,000 kWh
2	1 October 2000	3,000,000 kWh
3	1 April 2001	2,000,000 kWh
4	1 April 2002*	750,000 kWh
5	Deferred**	160,000 kWh

Deregulation

Power and Water's monopoly on the supply of electricity in the Northern Territory ended on 1 April 2000. This was in accordance with the assurances given by the Government in October 1999 that it would open the electricity market to competition. New legislation, passed by the Northern Territory Legislative Assembly in March 2000, opened the Northern Territory market not only to competition, but also to regulatory control by the Northern Territory Utilities Commission, established under the Utilities Commission Act. To major electricity customers, the potential benefits are lower average prices, a higher level of customer service, and more innovative energy services.

Under the Electricity Reform Act 2000, Power and Water has obtained licences from the Commission for each of its three main electricity activities (generation, networks and retail), as well as a licence for the role of System Controller. The Act requires the Commission to regulate prices for network services and prices at which electricity is sold to non-contestable customers (known as franchise customers).

* Commencement of Tranche 4 Contestable Customers

The grace period for Tranche 4 customers expired as at close of business 31 March 2004.

The contractual arrangements for Tranche 4 customers are slightly different to those of Tranche 1 to 3 customers. The Tranche 4 customer price is governed by the Electricity Reform Act – Electricity Pricing Order (Gazetted 30 March 2004) as the prices continue to be partially subsidised by the Northern Territory Government. For a copy of this pricing order, please contact the Contestable Customer Unit on (08) 8924 7250.

** Deferral of Tranche 5 Contestable Customers

Treasurer Syd Stirling has announced the Government’s decision to defer the remaining contestability tranches for up to five years. Mr Stirling said the departure of NT Power from the Territory had left Power and Water Corporation as the only supplier of electricity to the vast majority of Territorians.

“As a result, small to medium size customers will not be able to choose an alternative supplier of electricity from 1 April 2003 as originally envisaged,” he said.

“In the current circumstances, the Government considers that the public interest would be best served by deferring the timetable requiring small customers to choose their supplier.”

Mr Stirling said the Government remained committed to introducing competition in the electricity market.

Default Tariffs

Contestable Customers who are not supplied electricity through a contract may be charged for electricity based on a ‘Default Tariff’. The Default Tariff for Contestable Customers is designed to encourage customers to contract in the contestable electricity market and to reflect the risk involved in supplying these customers for an unspecified (possibly short) period.

Default Tariff Pricing Principles

(In accordance with 21.5 of Power and Water Corporation Retail’s licence)
Power and Water Corporation Retail has been nominated the Default Retailer for “Out of Contract Contestable Customers” (OOCC Customers) in the Northern Territory Electricity Market.

In accordance with its licence, Power and Water Corporation Retail determines the terms and conditions under which OOCC customers are supplied with electricity (default contract).

The over-riding principle for these arrangements is contained in 21.2 of Power and Water Corporation Retail’s licence:

The licensee must offer to sell electricity to an out of contract contestable customer on terms and conditions considered fair and reasonable in the circumstances by the licensee.

If a complaint is lodged with the Utilities Commission regarding Power and Water Corporation Retail’s default tariff the Utilities Commission will investigate the claim and will audit Power and Water Corporation’s adherence to the principles contained in this document. There can be no complaint regarding the standard terms of the default contract apart from the default tariff.

The following are Power and Water Corporation Retail’s Default Tariff Principles.

1. The default tariff should provide an economic incentive for contestable customers to contract in the Northern Territory Contestable Electricity Market.
2. The default tariff is a bundled rate, which covers costs for generation, network, system control and retail activities and margin.
3. The default tariff should include the additional administration costs associated with servicing this small group of customers.
4. The default tariff should include factors that reflect the risk associated with:
   • The uncertainty regarding the temporary nature of the electricity supply arrangements; and
   • The creditworthiness of OOCC customers.
5. Other factors which should be considered are:
   • The geographic location of each OOCC Customer;
   • Any specialised electricity supply requirements
   • The power factor at each OOCC Customer’s supply point
   • The electricity loss factors incurred in supplying each OOCC Customer
   • The opportunity costs for Power and Water Corporation Retail.
6. A factor to cover Power and Water Corporation Retail’s renewable energy obligations or any new taxes or charges should be included.
7. Nothing in the default tariff should disclose, or enable calculation of normal confidential cost elements used to prepare commercial offers made by Power and Water Corporation Retail.
   

JIM BAMBER
General Manager Retail
31 March 2005

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