Switched On: Energy Consumers Guide

The ERA has produced a guide to help consumers understand more about the energy supplied to their residence.

The Basics

The Western Australian Government has made various laws and rules to regulate the energy industry. The Economic Regulation Authority (ERA) oversees some of these laws and is responsible for the licensing of energy suppliers. This guide will help you understand the energy industry and your rights and responsibilities as an energy customer.

Who does this guide apply to?

Most of the rights and responsibilities covered by this guide apply only to retailers and customers of licensed retailers and distributors.

A licensed retailer or distributor holds a licence issued by the ERA for the supply of energy. Examples of licensed retailers include Synergy, Horizon Power, Alinta Energy and Kleenheat Gas. Examples of licensed distributors include Western Power, Horizon Power and ATCO Gas Australia.

Some retailers and distributors do not have a licence – these are called ‘exempt retailers’ or ‘exempt distributors’. An exemption is provided by the State Government.

If an exempt retailer or distributor supplies your energy, you may still be entitled to some protection measures.

How energy is supplied to your property

Electricity is produced by generators, while gas is extracted from gas fields by gas producers. Transmission organisations transport the energy to distributors through high voltage powerlines or high-pressure pipelines. Distributors own the low voltage or low-pressure distribution networks (i.e. electricity poles or gas pipelines) that deliver the energy to homes and businesses.

Retailers sell energy to residential and business customers. To supply energy to your home, your retailer will enter into contracts with both generators or gas producers and your distributor. The contracts with generators/gas producers ensure that the retailer receives electricity or gas, which it can then sell to you. The contract with the distributor provides for the transportation of that electricity or gas from the generator or gas field to your home and provides for metering services so that the energy can be measured and recorded.

The electricity industry

There are three major electricity networks in WA. These are the South West Interconnected System (SWIS), the North West Interconnected System (NWIS) and the Esperance System.

In 2015/16, over 1,035,000 electricity customers lived in the area supplied by the SWIS, compared to approximately 46,000 customers in other parts of the state.

Each network usually only has one distributor. This distributor may however transport electricity on behalf of several retailers. In the SWIS area, Western Power is the main licensed distributor and Synergy the largest licensed retailer. Horizon Power is the main licensed distributor and retailer for the area outside of the SWIS. Organisations can take on more than one supply role. For example, Horizon Power is a generator, transmitter, distributor and retailer.

Licensing the energy supply industry

Electricity generators, transmitters, distributors and retailers must have a licence issued by the ERA to supply electricity. Gas distributors and retailers who supply small use customers must also have a licence issued by the ERA. There are a few exceptions to this rule.

The ERA monitors licensed organisations to see if they comply with the conditions of their licences. When non-compliance is detected, the ERA may take action to make an organisation comply with the licence.

Who to contact and when?

As a customer, you only deal directly with your retailer or distributor. You do not have a direct relationship with other industry participants, such as generators.

Below is a list of the types of issues that you may need to contact a retailer or distributor about.

In addition to the ERA, there are other agencies that oversee the supply of energy. The main ones that you should be aware of are:

How are energy prices set?

The price you pay for energy is made up of four costs:

Generation costs: costs to build generators or gas plants and generate electricity or extract gas.

Transmission costs: costs to build and maintain the high voltage power line or high pressure pipeline network.

Distribution costs: costs to build and maintain the network of pipes, low voltage poles and meters that deliver, measure and record energy to households and businesses.

Retail costs: costs to connect customers, provide customer service and manage accounts.

Energy prices

In the SWIS area, on average about 90 per cent of the price you pay for electricity is made up of generation, transmission and distribution costs, whilst retail costs make up about 10 per cent.

The State Government determines the maximum retail tariffs Synergy, Horizon Power and most gas retailers may charge their gas and electricity small use customers. When determining retail tariffs, the Minister for Energy will take into account the amount that retailers must pay to purchase and transport the energy to their customers.

The ERA regulates the transmission and distribution network cost component of some gas and electricity transmission and distribution networks. This regulation occurs through access arrangements, which the ERA uses to determine the amount of revenue that owners of gas and electricity transmission and distribution networks may earn from those who use their networks (i.e. the amount a retailer must pay to the transmission and distribution companies in order to transport energy to customers through their networks).