Implementation of the Consumer Data Right regime (CDR) in the banking sector (known as 'Open Banking') has commenced and the energy and telecommunications sectors are next in line.

On 30 June 2020, the Treasury released the final version of the Consumer Data Right (Energy Sector) Designation 2020 (Energy Designation Instrument), which establishes the energy sector as next in line to be subject to the CDR. The Designation Instrument identifies certain data sets (including consumers' electricity connections, energy consumption, charging and billing history, and retailers' available products) that can be shared between relevant parties once the CDR is implemented.

The Energy Designation Instrument supports an implementation program for the CDR in the energy sector. The initiative is being carried-out by the Australian Energy Market Operator (AEMO) in conjunction with the Australian Competition and Consumer Commission (ACCC), the Treasury, the Consumer Data Standard Body (Standards Body), and the Office of the Australian Information Commissioner, among others.

Further, on 7 July 2020, the ACCC invited stakeholder input on the preliminary positions taken by the ACCC in the current set of CDR Rules applying to the banking sector. This will be used as the basis for drafting the CDR Rules for the energy sector. The ACCC expects to consult with stakeholders throughout the remainder of 2020, and to produce draft CDR Rules for the energy sector following this consultation process.

The AEMO expects the CDR will take effect in the energy sector in 2021 (except in Victoria, which has not made a declaration under section 56AS(1) of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) declaring its participation in the CDR). However, this will depend on the timeline for the development of the CDR Rules for the energy sector, as well as the data and technical standards for the operation of the CDR, as developed by the Data Standards Body.

The CDR in the energy sector

The CDR is a scheme intended to grant individuals and businesses the right to access specific information relating to them (held by Australian energy retailers) and to authorise the disclosure of that information to accredited persons.

As in the financial services sector under Open Banking, the main purpose of the CDR in the energy sector is to provide consumers with greater choice of energy services they consume. At the same time, CDR will establish a framework that helps consumers find the best energy deals and make informed decisions about their energy consumption. The CDR is also intended to encourage competition, by giving individuals and businesses greater access to their data.

Although not readily apparent, the Energy Designation Instrument initially only applies to information held by the National Electricity Market (which includes the ACT, New South Wales, Queensland, South Australia, Victoria and Tasmania, but excludes Western Australia and the Northern Territory).

Key takeaways from the Energy Designation Instrument

The Energy Designation Instrument sets out a number of important points which energy sector retailers and consumers should be aware of. Relevantly, the Energy Designation Instrument:

• Sets out the specific classes of information relating to consumers or their associates (for example spouse) and the energy services supplied to those consumers, which will be subject to the CDR, including information about:
  • a customer, including identifying information or their contact details;
  • the sale or supply of electricity to customers, including metering data and billing information, but excluding information which has been 'materially enhanced' beyond the original source material (subject to certain exceptions); and
  • retail arrangements relating to the sale or supply of both electricity and natural gas.
• Sets out more limited classes of information of generic (ie non-tailored) product information relevant to the supply of natural gas to prospective new customers, including the costs associated with, and the terms and conditions of, those arrangements;
• Establishes the AEMO as the designated 'gateway' for (intermediary in) the sharing of the information described above;
• Sets out the relevant 'data holders' for the information described above from time to time (being either energy retailers, the AEMO, the Australian Energy
• Regulator (as the administrator of the 'Energy Made Easy' energy comparison site for the ACT, NSW, Qld, SA and Tas) and the Victorian Department (currently the Department of Environment, Land, Water and Planning) which administers the Victorian 'Energy Compare' website (however, as noted above, a further declaration will need to be made under the Competition and Consumer Act in order to apply the Energy Designation Instrument to the Victorian Department);
• Contemplates that data held by energy retailers on and from 1 July 2018 will be subject to the CDR; and
• Specifies that information subject to the Energy Designation Instrument must be provided free of charge (for access or use).

What the scheme means for energy distributors and retailers

The CDR is the latest in a series of industry-wide reforms introduced in recent years to increase competition and portability in the energy sector.

Even though electricity consumers already have a right to obtain their energy data from their retailers, the complexity of the energy sector means that consumers are often unable to make informed decisions about the use of that data. This can make it difficult for energy consumers to shop around for better energy prices. The plethora of energy products provided by retailers makes it difficult to compare 'like for like' or even understand the advice of those who seek to make the comparison for them.

The potential game changer for the application of CDR in the electricity (and, to a lesser extent, natural gas) sector would be for third parties (such as private comparison service providers and competing retailers) to not only access that data, but also use that data to expand the scope of their existing services (for example by applying for, managing and changing products on behalf of customers with their consent).

This extension to permit authorised third party access remains under consideration by the policymakers and is not without its risks. For example, on the same day that the Energy Designation Instrument was released, the Australian Energy Market Commission noted in its 2020 Retail Energy Competition Review the need to ensure the existing 'explicit informed consent' obligations, designed to protect energy consumers, will need to be revised if third parties are able to apply for, manage and change products on behalf of customers. It is clear that any such revisions will need to ensure that energy consumers are not exploited or signed up to products that are not best in market.

The final scope of the CDR should be monitored by energy retailers on the East Coast and in South Australia and Tasmania.

Impacts and opportunities arising from CDR

Energy retailers and distributors need to be aware that the CDR changes will impact numerous processes within their organisation, resulting in several systems requiring an upgrade or a new system implementation, with a potentially significant technology investment. This is further compounded by the technology impacts arising out of the current regulatory change programs related to 5 Minute Settlement and Global Settlement.

However, these changes open the door to new opportunities for energy retailers and distributors. Participants in the energy market should look to review their organisational strategy in light of CDR. Will that strategy be to simply adhere to the CDR Rules, or alternatively, to explore opportunities to develop new products and services, as well as partnership models with third parties?

Based on the in-flight initiatives already underway and the short implementation timeframes for CDR within the energy sector, energy market participants should consider pre-empting and preparing themselves in anticipation. Implementation programs should already be commenced with 'no-regrets' initiatives, while the final scope of the CDR is still being determined

How MinterEllison can assist

We have assisted numerous clients in understanding the CDR as it applies to Open Banking and have assisted clients in navigating regulatory change programs.

As such, we are well placed to assist our clients in the energy sector to:

• Understand how the CDR works, the implications for data holders and accredited persons as well as the inherent privacy obligations in the CDR.
• Develop internal CDR policies and training (critical to ensure effective compliance).
• Develop frameworks and methodologies for compliance with the CDR, while maintaining compliance with existing regulations for the sale and supply of electricity and gas to retail customers, including the National Energy Retail Law and/or the Victorian Electricity Industry Act and Energy Retail Code (for example in relation to compliance with 'explicit informed consent' requirements).
• Review and advise on existing data strategies, governance models and required cyber-security capability uplifts.
• Conduct technology current state and future needs assessments, including readiness and organisational impact assessments, and define the required technology change program.
• Draft, advise on and negotiate agreements with technology providers, particularly in relation to the implementation of systems or provision of IT services designed to allow energy retailers and distributors to ensure compliance with the CDR.