NATIONAL REGULATORY REPORTING FOR ELECTRICITY DISTRIBUTION AND RETAILING BUSINESSES Utility Regulators Forum March 2002 © Commonwealth of Australia 2002 ISBN This work is copyright. Apart from any use as permitted under the Copyright Act 1968 no part may be reproduced by any process without permission from the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publications, ACCC, Dickson ACT 2602. Background The Utility Regulators Forum was established in recognition of the need for cooperation in a federal system among State-based regulators. The forum consists of regulators operating in industries where utilities that traditionally operated as monopolies are being opened up to competition as a result of the competition reform process. By acting as a focal point for regulators in different jurisdictions the forum seeks to: < foster understanding of issues and concepts faced by regulators on similar industries; < minimise overlap of regulations for large users who operate across jurisdictions; < provide a means of exchanging information; and < enhance the prospects of consistency in the application of regulatory functions. The following paper is released by the Regulators Forum to encourage discussion in a range of important regulatory issues. CONTENTS 1. Introduction ...................................................................................................................... 1 2. Electricity Distribution Businesses ................................................................................. 3 2.1 Distribution Quality of Service ...................................................................................... 3 2.2 Distribution Regulatory Accounts................................................................................ 11 3. Electricity Retailing Businesses..................................................................................... 16 3.1 Introduction .................................................................................................................. 16 3.2 Access to Affordability - Proposed Measures.............................................................. 20 3.3 Customer Service – Proposed Measures ...................................................................... 25 3.4 Supporting Information................................................................................................ 28 4. Implementation of Framework..................................................................................... 30 Appendix 1: Definitions for Distribution Businesses’ Reporting....................................... 32 Appendix 2: Definitions for Retail Businesses’ Reporting ................................................. 38 Attachment 1: Distribution Quality of Service Reporting Template .................................. 1 Attachment 2: Distribution Regulatory Accounts Reporting Template............................ 3 Attachment 3: Retailing Quality of Service Reporting Template....................................... 7 1. Introduction Since the creation of the National Electricity Market (NEM), there have been criticisms of the different regulatory reporting requirements imposed by the various jurisdictional regulators. Although the transmission sector has almost completed its move towards a national regulatory framework under the ACCC, the remaining sectors (generation, distribution and retail) retain a significant element of State or Territory based regulation. With the different jurisdictional legal frameworks, requirements for information vary; in general, each jurisdiction has continued to collect information in the form that it was collected prior to the NEM. This has resulted in the need for businesses operating in multiple jurisdictions to collect their data in jurisdiction-specific forms. Indeed, many businesses only have the capability to collect data in the form collected prior to the NEM. Such differing requirements have prevented cross-jurisdictional businesses from achieving economies from a single data base collection system, and also made it difficult to compare performance across jurisdictions. Accordingly, in November 2000 the Utility Regulators Forum agreed that jurisdictional economic regulators would develop a core set of nationally consistent performance reporting requirements covering the electricity industry. A Steering Committee on National Regulatory Reporting Requirements was established to oversight the development of the requirement for reporting of: < service performance of electricity distributors; < financial performance of electricity distributors; and < service performance of electricity retailers. The Steering Committee comprised representatives of jurisdictional and national electricity regulators and relevant departments from NSW, Victoria, ACT, Queensland, Tasmania and South Australia. Three working groups were established comprising staff from the above regulatory organisations and electricity industry representatives nominated by the Electricity Supply Association of Australia. Draft proposals were distributed for comment to the industry and other interested parties in August 2001, and comments received were reviewed by the working groups. Final draft proposals were submitted to the Steering Committee in December 2001 for approval. National Regulatory Reporting for Electricity Distribution and Retailing Businesses 1 This document presents the outcome of the above process, and sets out the agreed national regulatory reporting framework for the three areas covering the electricity distribution and retailing sectors. National Regulatory Reporting for Electricity Distribution and Retailing Businesses 2 2. Electricity Distribution Businesses Distribution network service providers (DNSPs) operate a network of low voltage substations and wires that transport electricity from distribution centres to end-use customers. These utilities may be either privately or publicly owned. The networks must be maintained and operated securely and in a manner that provides open access to participants who trade in the national electricity market and to smaller operators who trade directly with local retailers. DNSPs are regulated businesses whose prices and service standards for prescribed services are set by independent regulators. Each State and Territory jurisdiction has its own regulator, and each has developed different reporting requirements for DNSPs operating in their jurisdiction. The Steering Committee was established to determine a common reporting framework acceptable to all jurisdictions. 2.1 Distribution Quality of Service The objective of the Quality of Service Working Group was to review and compare the measures of network service quality currently used by regulators, and develop performance measures that can be collected on a consistent and reliable basis across the jurisdictions. The Working Group’s terms of reference required it to develop quality of service measures having regard to: < the costs of measurement and data collection; < their appropriateness as a basis for performance benchmarking; < compatibility with measures currently used by jurisdictions; < the extent to which they reflect and encompass issues of concern to customers; < the availability of data to calculate the measure. While the Working Group recommended measures that in its view balanced the above objectives, selection of performance measures was primarily driven by the availability of data in the short-term. The measures proposed are or should be monitored by distributors in the normal course of their business. However it is recognised that in some cases there are deficiencies in the information currently available, and further work is needed to improve the quality of performance measurement. As a number of submissions noted, much of the data currently collected and the systems for recording the data serve the objective of asset management rather than monitoring the quality of service provided to customers. National Regulatory Reporting for Electricity Distribution and Retailing Businesses 3 Submissions also noted that improved monitoring and reporting of some performance measures may involve additional investment in capital equipment and in the analysis and reporting of data. To the extent that this is so, there is a balance to be struck between the benefits of more accurate and comprehensive performance monitoring and the costs of measurement and reporting. The Steering Committee identified a number of areas in which improved reporting would serve to facilitate the comparison of distributors’ performance, and potentially provide information on future network investment priorities. These issues, discussed below, will be considered by the Steering Committee when the regulatory reporting framework is reviewed. However, in some cases enhanced performance reporting may be dependent on jurisdictional regulators approving additional expenditure. While performance measures for network reliability are widely used in a standardised format, there are limitations with the current systems and practices for monitoring and calculating reliability performance that impact on the robustness and comparability of reported data. These include: < where distributors’ information systems do not provide connectivity data that links individual customers to a part of the physical network, customer-weighted reliability measures (such as SAIDI and SAIFI) are based on estimates of customer numbers.