28 FEBRUARY

NEW ZEALAND GAZETTE

539

Distribution and Retail Issues

25. The Governance Board should:

• develop model approaches to distribution pricing;
• draw up model Use of System agreements for use of distribution lines, ensuring that the interests of retailers and users are given weight equal to that of line distribution companies (the model Use of System agreements should include the terms and conditions for connecting distributed generation to the network);
• ensure that terms and conditions for connection of distributed generation to networks is included within the model distribution pricing methodology and that these terms and conditions are subject to dispute resolution under the new rules;
• take responsibility for the enforcement and any future development of the protocols for consumers to switch retail suppliers;
• establish arrangements to ensure an orderly transition for end users in the event that a retail company becomes insolvent;
• develop rules to ensure that all retailers serving more than 25 per cent of the market for domestic consumers in a line network area, measured by the number of consumers to whom profiling applies, must offer pre-payment meters to domestic consumers at reasonable cost; and
• draw up a model contract for domestic consumers, in consultation with the Ministry of Consumer Affairs and consumer representatives. The following features are to be designed into the model contract:
  • transparency of charge components;
  • frequency of billing;
  • company-specific arrangements for dispute resolution⁶;
  • arrangements for consumer protection with respect to outages;
  • the arrangements mentioned above for an orderly transition for end users in the event of insolvency of a retailer;
  • arrangements mentioned above on the availability of prepayment meters to domestic consumers reasonable cost.

26. The Government expects distribution companies to keep changes to rural line charges in line with urban line charges and will monitor developments in rural charges.

27. The Government expects all retailers to offer at least one tariff to domestic consumers with a fixed charge of no more than 10 per cent of the bill of the average domestic consumer (i.e. consuming 8,000kWh per annum). This new tariff should incorporate the following design features:

• increases in variable (i.e. per kWh) charges in the new tariff are to be constrained so that the annual bill of the average domestic consumer (8,000 kWh per annum) will be the same regardless of their choice of current or new optional tariffs;
• the new tariff is to be advertised and promoted in the same manner as existing tariffs;
• the new tariff to be available only for dwellings where the consumer usually resides;
• the new requirement is to extend to cover both “standard” tariffs and tariffs for “interruptible load” such as water heating and nightstore heaters;
• all retailers to be required to make the new tariff genuinely available (subject to usual credit-worthiness tests), irrespective of the size of the consumer; and
• tiered variable tariffs (e.g. high c/kWh for the first 2,000 kWh per annum) are to be precluded (this is to ensure that the lower fixed charge offers genuine advantages to small consumers).

28. The Government will monitor developments in fixed charges and will, if necessary, regulate to ensure that its policy is enforced.

Consumer Complaints Resolution System

29. The Government expects the industry, in consultation with the Ministry of Consumer Affairs, to establish a system under which complaints by consumers relating to retail and line distribution companies can be appropriately addressed. As set out in paragraph 7, this system is to be included in the Governance Board’s rules.

30. The system should include the following features:

Key Features of the Consumer Complaints Resolution System

The consumer complaints resolution system will feature:

• an industry code of practice that includes standards for contracts (covering such matters as billing and disconnection) and metering practices;
• membership by all distributors and retailers;
• robust internal complaints-handling processes within all member companies;
• an independent, external, consumer complaints resolution scheme that meets the following standard benchmarks:
  • accessibility: the scheme provides all consumers with rights of access by promoting knowledge of its existence, being easy to use and having no cost barriers;
  • independence: the decision-making process and administration of the scheme, including appointment and funding, ensure appropriate independence of the office-holder from member companies;
  • fairness: the scheme produces decisions which are fair and seen to be fair by observing the principles of procedural fairness, by making decisions on the information before it and by having specific criteria upon which its decisions are based;
  • accountability: the scheme publicly accounts for its operations by publishing its determinations and information about complaints and highlighting any systematic industry problems;
  • efficiency: the scheme operates efficiently by keeping track of complaints, ensuring complaints are dealt with by the appropriate process or forum and regularly reviewing its performance; and

⁶ Such company-specific arrangements are also required as a component of the development of the industry-wide consumer complaints resolution system.