Energy Coordination (Last Resort Supply) Regulations 2005

Last resort supply plan: A document that a supplier of last resort must prepare and submit to the Authority for approval. It sets out rights, powers, duties, contractual arrangements, information to customers, and the transfer process. It must meet the objectives in reg 4. The plan cannot operate without an Authority order under section 11ZAD(1) of the Act.

Supplier of last resort: Not defined in the regulations, but the term is used throughout. By operation of the Act, it is a person who holds a trading licence and is appointed by the Authority to supply small use customers in a given supply area after the relevant retailer fails. The regulations impose duties on that supplier to consult (reg 9) and notify (reg 8). They also give the supplier a right to charge a last resort supply fee, subject to plan approval.

Affected participant: Defined in reg 3. It includes pipeline operators, distribution licensees, trading licensees that sell gas in the area, persons who sell gas to the supplier of last resort for resupply, persons prescribed under the retail market rules (section 11ZOD(1)(b)), and the formal entity for an approved retail market scheme (section 11ZOF(1)(b)). The supplier of last resort is excluded. Affected participants must be consulted when the plan is drafted (reg 9). They are also notified by the Authority when an order is published (reg 10).

Transferred customer: A small use customer who is moved to the supplier of last resort under the plan. The transfer can be effected without the customer’s consent - the notification only informs the customer after the fact, and must state that consent was not required (reg 8(2)(c)(iii)). The customer is then deemed to have entered into the supplier’s standard form contract.

Grace period: An optional feature of a last resort supply plan. If included, it gives customers a window in which they can switch to another supplier (including a different retailer) before being automatically transferred to the supplier of last resort. The plan must specify when the grace period begins and ends, and a customer who does not exercise the option during that period is transferred as soon as practicable after its end (reg 6). Without a grace period, customers are transferred directly on the order taking effect.

Last resort supply fee: A fee payable by transferred customers to the supplier of last resort. The plan may, but need not, include one. If included, the plan must state the amount, the calculation method, and when it is payable. The method must take into account the supplier’s forecast benefits and costs (reg 7(3)). The Authority must be satisfied that the fee reflects the supplier’s reasonable costs before approving the plan. There is no cap or fixed formula; the Authority exercises discretion.

Authority: The body (not defined in these regulations, but presumably the Economic Regulation Authority under the Act) that makes the order, approves or determines the plan, and receives consultation. It also publishes newspaper notices and notifies the supplier and affected participants.

Standard form contract: Defined in the Act section 11WB and used in reg 11. On transfer, each transferred customer is deemed to have entered into the supplier of last resort’s standard form contract. The terms of that contract are not specified in the regulations; they are the supplier’s usual retail terms, which may include late payment penalties, disconnection rights, and other conditions that the customer did not voluntarily accept.

The regulations directly affect three main groups: small use gas customers in a supply area where a last resort plan is triggered; the supplier of last resort (a retail licensee appointed by the Authority); and the affected participants defined in reg 3 (pipeline operators, distributors, other retailers, and retail market scheme entities). Indirectly, the regulations affect all gas retailers and customers because the existence of the scheme affects the perceived risk of retailer failure, the terms of retail contracts, and the cost of capital for smaller retailers.

Small use customers: For a customer in a supply area, an order under section 11ZAD(1) means their incumbent retailer ceases to supply them. The customer is then transferred to the supplier of last resort without consent. The customer may receive a grace period if the plan provides one, but otherwise has no choice. The customer must pay any last resort supply fee set out in the plan. The deemed standard form contract may differ from the previous contract - in price, terms, or service conditions. Costs to the customer include the actual fee, potentially higher tariffs, and the compliance cost of learning about the new arrangements (though the supplier must notify them). The customer also loses the freedom to choose the timing of their provider switch; they are forced either to act quickly if there is a grace period or to accept the supplier of last resort.

Supplier of last resort: This is the entity that must prepare a draft plan, consult with the Authority and affected participants (reg 9), operate under the plan once approved, notify each transferred customer in writing (reg 8), and supply gas under its standard form contract. The supplier bears the administrative and legal costs of plan preparation, consultation (possibly multiple rounds), and notification (individual letters to each customer). It can recoup its forecast reasonable costs through a last resort supply fee (reg 7), but only if the Authority approves the fee as reasonable. The fee may not cover all costs if forecasts are erroneous or if the Authority takes a narrower view of “reasonable costs”. The supplier also takes on the credit risk of new customers it did not choose, and must absorb bad debts under its contract terms.

Affected participants: These are the parties listed in reg 3 - pipeline operators, distribution licensees, other gas sellers, and retail market scheme entities. They must be consulted by the supplier of last resort during plan preparation. They do not have a veto over the plan, but they have an opportunity to raise concerns about operational impacts (e.g., capacity constraints, data sharing, billing interfaces). The compliance burden on affected participants is time spent in consultation, reviewing draft plans, and possibly adjusting their own systems to accommodate the transfer. They are not required to supply gas to the supplier of last resort unless they fall within the other categories of affected participants (e.g., as a person who sells gas to the supplier of last resort), but their cooperation may be commercially necessary for the plan to work.

The Authority: While not a regulated entity, the Authority is obliged to follow the notification procedures in reg 10 - giving written notice to the supplier and affected participants, publishing a newspaper notice, and including specific information. It also must review the draft plan and decide whether to approve it or determine its content (section 11ZAG). Its workload increases when a plan is activated.

Duty to consult: Regulation 9 requires the supplier of last resort to consult with the Authority and affected participants when preparing a draft last resort supply plan. This duty arises under section 11ZAF(a) of the Act. The regulation does not specify the method or depth of consultation, only that it must occur. In practice, this likely means written submissions or meetings. The supplier’s failure to consult could be a ground for the Authority to refuse to approve the plan, or could expose the supplier to enforcement under the Act.

Content obligations: Regulation 5 imposes duties on the plan - it must set out the rights, powers, and duties of the supplier and affected participants; describe contractual arrangements for ensuring supply; ensure adequate information to customers; and prescribe the transfer process, including timing and terms. Regulation 6 adds that if a grace period is included, the plan must specify its start and end and state that non‑transferring customers will be transferred after the grace period. Regulation 7 requires that if a last resort supply fee is included, the plan must state the amount, calculation method, and when it is payable, and the method must take into account forecast benefits and costs. The Authority must be satisfied the fee reflects reasonable costs.

Notification duty on the supplier: Regulation 8 obliges the supplier of last resort to give each transferred customer written notice as soon as practicable after the transfer, containing the reasons for the order, the day the plan came into operation, an outline of arrangements (including that consent was not required, the terms and conditions, and any last resort supply fee), and the supplier’s contact details. The duty is strict: the supplier must act promptly.

Notification duty on the Authority: Regulation 10 requires the Authority to give the supplier and affected participants written notice of the order as soon as practicable and to publish a newspaper notice. The notice must include the reasons, the day of operation, the supplier’s contact details, and an outline of the transfer process, including consent not being required, any fee, and grace period details. The Authority must also state the right to transfer during a grace period.

Rights of the supplier of last resort: The supplier has the right to charge a last resort supply fee, but only if the plan so provides and the Authority approves it. The supplier also has the right to have its standard form contract govern the supply from the transfer date (reg 11). The supplier does not need the customer’s consent; the transfer is automatic.

Rights of transferred customers: Customers have the right to be notified of the transfer in writing. If the plan includes a grace period, they have the right to transfer to another supplier during that period (reg 6). They also have the right to receive information about the plan - the notice and the newspaper publication must contain details. However, they do not have a right to object to the transfer itself. They are bound by the terms of the supplier of last resort’s standard form contract, which they have not agreed to sign. They can, of course, seek another supplier after the transfer, but they must then terminate the deemed contract in accordance with its terms.

Duties of affected participants: For affected participants, the only explicit duty is to be available for consultation (reg 9). The regulation does not compel them to cooperate or provide information, but the plan may rely on their involvement (e.g., pipeline operators to maintain flow, distributors to allow access). If an affected participant fails to cooperate, the Authority may need to use powers under the Act to compel compliance.

The regulations themselves do not create specific penalties. Any enforcement for breach of these regulations would rely on the general penalty provisions in the Energy Coordination Act 1994. That Act (not reproduced here) would typically set penalties for failing to comply with a condition of a licence, failing to comply with a last resort supply plan, or failing to comply with a direction from the Authority. Because the regulations are made under section 11ZOD of the Act, a breach of a regulation is an offence against the Act - section 11ZOD(3) of the Act likely provides that a person who contravenes a regulation commits an offence, with a maximum penalty prescribed in the Act (but not in the regulations themselves).

The only conduct that might be penalised includes:

• The supplier of last resort failing to consult with the Authority and affected participants (reg 9).
• The supplier failing to give written notice to a transferred customer as required (reg 8).
• The Authority failing to notify or publish (but the Authority is a public body; enforcement would be through administrative law or Ombudsman complaints, not a criminal penalty).
• The supplier failing to include mandatory content in a plan (reg 5, 6, 7), but that would be a defect in the plan itself, likely leading to refusal of approval rather than a direct penalty.

The last resort supply fee provisions (reg 7) are enforced through the plan approval process: if the fee does not reflect reasonable costs or the plan does not specify the method, the Authority will not approve it. If a supplier charges a fee not specified in an approved plan, that would breach the plan and the Act.

Practical enforcement risk is low. The scheme is a contingency against retailer failure; it may never be used. If it is used, the most likely dispute would be over the reasonableness of the fee, litigated in the State Administrative Tribunal or via judicial review. A customer refusing to pay a last resort supply fee could be disconnected under the contract terms, but the supplier must follow the standard disconnection procedures under the Act and other gas regulations.

There are no compliance or infringement notices specific to these regulations. The enforcement regime is indirect - the Authority can vary or revoke an order, or take other action under the Act. The supplier of last resort could also be held liable for costs if it does not comply with the plan.

Energy Coordination Act 1994 (the primary Act): These regulations sit under Part 3 Division 8 of that Act. The regulations give operational content to the last resort supply plan provisions. The Act defines key terms (supplier of last resort, Authority, small use customer, standard form contract, retail market rules) that are incorporated by reference. The Act also sets out the conditions under which the Authority can make an order (section 11ZAD), the approval process for plans (section 11ZAG), and the consultation requirement (section 11ZAF). The regulations fill in the gaps but do not override the Act. If a conflict arises, the Act prevails.

Retail market rules (section 11ZOD(1)(b)): The definition of affected participant in reg 3 includes persons prescribed for the purposes of section 11ZOD(1)(b) in relation to the retail market rules for a distribution system. This means that if the retail market rules designate additional participants (e.g., a market operator, a reconciliation manager), those participants are also affected participants for the purposes of the regulations. The retail market rules themselves (made under the Act) may impose additional obligations on the supplier of last resort or transferred customers, such as data provision or metering arrangements.

Gas supply contracts and consumer protection laws: Regulation 11 deems transferred customers to have entered the supplier of last resort’s standard form contract. That contract must comply with the Energy Coordination Act (including any licence conditions on minimum content) and with general consumer law (e.g., Australian Consumer Law, which applies as a law of Western Australia). Terms that are unfair under the Australian Consumer Law may be void. The deeming does not exempt the contract from the requirements of section 12 of the Energy Coordination Act (which relates to standard form contracts) or the National Energy Retail Law if adopted in WA (but Western Australia is not part of the National Energy Retail Law; it has its own regime under the Act). The interaction with the Gas Standards Act 1972 (WA) or Gas Industry (Obligations on Licensees) Regulations is not prescribed in these regulations, but the supplier must meet all applicable safety and technical requirements.

Competition and consumer law: The forced transfer of customers without consent could raise issues under the Competition and Consumer Act 2010 (Cth) (misuse of market power, exclusive dealing), but the regulations and the Act provide an express statutory authorisation - customers are transferred by force of law, not by the supplier’s unilateral action. That statutory authorisation should protect the supplier from antitrust liability as long as it acts within the plan and the order.

Insolvency law: The trigger for the scheme is the failure or withdrawal of a retailer. The regulations interact with the Corporations Act 2001 (Cth) - a receiver or liquidator of the failed retailer may have concurrent rights to collect debts or assign contracts. The last resort plan would override contractual rights of the failed retailer to assign customers, because the order operates under state legislation. There may be tension if the failed retailer is in external administration and the administrator wishes to sell the customer base. The plan’s forced transfer may complicate that sale, affecting the value of the insolvent estate. This tension is not addressed in the regulations.

The Energy Coordination (Last Resort Supply) Regulations 2005 were published in the Western Australian Government Gazette on 13 May 2005. They commenced on 14 May 2005, the day following publication. The commencement was timed to coincide with the coming into operation of Part 3 Division 8 of the Energy Legislation Amendment Act 2003, which inserted the last resort supply plan provisions into the Energy Coordination Act 1994.

The compilation table in the regulations shows only the original version. There are no reprints showing amendments. As of the compilation date (which appears to be the original gazettal), no amending regulations have been made. This means the regulations have remained unchanged since 2005 - a period of nearly two decades. Given the evolution of the gas retail market in Western Australia (especially the unbundling of retail and distribution, the introduction of retail market rules, and the potential for structural changes such as the introduction of a full retail contestability regime), the lack of amendment may indicate that the last resort provisions have either never been activated or have operated without causing controversy. Alternatively, it may reflect regulatory inertia - the regulations may be out of step with current industry practice, but no party has sought amendment.

The very narrow scope of the regulations (only 11 provisions) suggests a cautious approach. The original policy intent, as stated in the second reading speech for the Energy Legislation Amendment Act 2003 (which is not reproduced but can be presumed from context), was to create a safety net for small customers during a retailer failure. The regulations have not been updated to incorporate subsequent changes such as the National Gas Law (which applies in other jurisdictions but has limited application in WA), the Energy Operators (Powers) Act 1979, or any data protection requirements beyond what existed in 2005. This is a notable omission - modern data breach notification laws and privacy principles may impose additional obligations on the supplier of last resort when handling customer data, but these regulations are silent on the point.

The text of the regulations does not record any litigation history. Neither the compilation table nor any notes refer to court decisions. The regulations are part of a rarely activated contingency scheme. Since 2005, there have been no reported cases in the Western Australian Supreme Court, State Administrative Tribunal, or the Court of Appeal that cite these regulations. A search of the AustLII database (not in the source, but grounded in the absence of any mention in the compilation) would likely confirm no published decisions.

The reasons for the absence of litigation include: (a) the last resort scheme has never been triggered in a publicly known manner; (b) if triggered, the commercial stakes may be low enough that customers do not challenge the transfer or the fee; (c) the forced transfer and fee may be accepted as inevitable in a market with a failed retailer; and (d) the regulations are drafted in a way that gives the Authority significant discretion, making judicial review difficult (a customer would need to show unreasonableness in the fee approval or procedural error in consultation or notification).

Potential future litigation could arise if the Authority approves a last resort supply fee that a transferred customer or a customer advocacy group considers excessive. The test under reg 7(4) is whether the fee reflects the “reasonable costs” of the supplier. That is a fact‑intensive assessment and could be challenged if the supplier’s forecast is later shown to be inflated. Another possible challenge is the adequacy of consultation under reg 9 - if an affected participant argues it was not properly consulted, and the plan goes ahead, it could seek judicial review of the Authority’s order. But those cases would cite the Act’s provisions as much as the regulations.

No consent required. Both the supplier’s notice (reg 8(2)(c)(iii)) and the Authority’s newspaper notice (reg 10(3)(b)) must state that consent was not required for the transfer. This is a deliberate departure from normal contract law. A customer who does not read the newspaper or the postal notice may be surprised to find they have a new retailer and new contract terms. The grace period mitigates this only if it exists and if the customer is aware of it and acts in time.

Grace period is optional. Regulation 6(1) says a last resort supply plan may make provision for a grace period. There is no statutory obligation to include one. If the supplier or the Authority decides that the urgency of the situation justifies immediate transfer, customers get no grace period and no choice. Even if a grace period is included, it may be short - the regulations do not set a minimum duration. The plan specifies the period; it could be as short as a few days, making it impractical for customers to shop around.

Deemed standard form contract. Regulation 11 deems each transferred customer to have entered the supplier’s standard form contract from the transfer date. The customer has never seen that contract, let alone agreed to its terms. The regulations do not require the supplier to provide a copy of the contract before the transfer - only a post‑transfer notice with an “outline” of the arrangements. The customer may later discover that the contract includes onerous terms: high late payment penalties, a requirement to pay a security deposit, or permission for the supplier to disconnect for non‑payment within a short period. The customer’s right to terminate is limited to the contract’s own termination provisions (typically 30 days’ notice). They are locked in for at least that period.

Last resort supply fee - no maximum, no sunset. The fee can be any amount that the Authority considers reflects reasonable costs. There is no cap, no indexation formula, and no requirement that the fee be reviewed after the plan comes into operation. The fee is a one‑off charge payable by each transferred customer. It could be substantial - for example, to cover the supplier’s cost of setting up billing systems, training staff, and absorbing credit risk. The method must take into account forecast benefits and costs, but the supplier has an incentive to inflate costs because the Authority is the only check. The Authority’s satisfaction is subjective; a customer would have difficulty challenging it.

Notification timing risk. The supplier must give notice to each transferred customer “as soon as is practicable after the transfer occurs”. But the transfer occurs on the day the order is published (or as specified in the order - reg 8(2)(b) refers to the day the plan came into operation). If the supplier delays notification, the customer may already have been disconnected (if the previous retailer’s failure caused an interruption) and may face a gap in supply. The regulations do not require the supplier to have a plan ready before the order - consultation and approval happen before activation, but notification only happens after. Customers could be left without gas if the supplier of last resort is not operationally ready.

Consultation is not binding. Regulation 9 requires the supplier to consult with affected participants, but it does not say the supplier must follow their recommendations. An affected participant (e.g., a pipeline operator) may raise serious operational concerns that the supplier disregards. The plan can still be approved if the Authority is satisfied. The affected participant has no right to veto or seek variation of the plan outside the Authority’s discretion.

No consumer compensation mechanism. The regulations do not provide for compensation to customers if the supplier of last resort fails to supply, overcharges, or does not honour the deemed contract terms. Customers must rely on the Authority’s oversight, the supplier’s licence conditions, or general consumer law. The cost and hassle of litigating small amounts would likely deter individual complaints.

For the supplier of last resort:

1. Drafting the plan. The supplier must prepare a draft last resort supply plan that meets the objectives in reg 4 (safeguard customer interests, ensure continuity, adequate information, equitable terms and prices, inexpensive implementation, cost recovery). The draft must, at a minimum, contain the content required by reg 5: rights, powers, duties of supplier and affected participants; a general description of contractual arrangements for supply; provisions for adequate customer information; and the customer transfer process (when and terms). If a grace period is to be included, the plan must specify its start and end dates (reg 6). If a last resort supply fee is to be charged, the plan must state the amount, calculation method, and when payable, and the method must take into account forecast benefits and costs (reg 7). The supplier must ensure the fee can be demonstrated to the Authority as reasonable.

2. Consultation. Before finalising the draft, the supplier must consult with the Authority and with all affected participants (as defined in reg 3). The consultation should be documented - minutes, correspondence, copies of submissions received. The supplier should consider and respond to concerns raised; while not legally required to adopt them, the Authority will likely weigh the adequacy of consultation when deciding whether to approve the plan.

3. Approval process. The supplier submits the draft to the Authority. The Authority may approve it, approve it with changes, or determine its own plan (under section 11ZAG of the Act). The supplier must cooperate with the Authority during this process, providing any additional information requested to justify the fee or other provisions.

4. Post‑order notification. Once the Authority publishes an order under section 11ZAD, the supplier must, as soon as practicable after the transfer occurs, send each transferred customer a written notice containing (reg 8): reasons for the order, the day the plan came into operation, an outline of the arrangements (including that consent was not required, the transfer date, terms and conditions, any fee, and the duration), and the supplier’s full contact details (business name, address, email, website, phone).

5. Deemed contract. From the transfer date, the supplier must supply gas to each transferred customer under its standard form contract (reg 11). The supplier should ensure that this contract is available and accessible, even though it was not signed by the customer. The supplier must also comply with all other applicable laws (consumer law, safety, metering, billing) in the performance of that contract.

6. Ongoing obligations. The supplier must honour the plan for its duration. If the supplier’s costs turn out to be lower than forecast, customers may have overpaid; the plan should address whether a refund mechanism exists (the regulations are silent - best practice would include a reconciliation clause). The supplier should also maintain documentation of its cost forecasts and actual costs in case the Authority later reviews the fee.

For affected participants:

1. Cooperation with consultation. On receipt of a draft plan from the supplier, affected participants should review it and provide comments to the supplier within a reasonable timeframe. They should raise any operational issues that could affect gas supply, data transfer, or billing integration. If they do not respond, they risk being bound by arrangements that are impractical for their systems.

2. No direct compliance obligation unless the plan imposes a specific duty on them (e.g., to provide meter data or network access). If the plan does impose a duty, they must comply or seek a variation through the Authority.

For the Authority:

1. Notification. On publication of an order under section 11ZAD, the Authority must promptly give written notice to the supplier and each affected participant, and publish a notice in a newspaper circulating in the relevant supply area. The newspaper notice must include the order, reasons, day of operation, supplier’s contact details, and an outline of arrangements, including consent not being required, any fee, and grace period information (reg 10). The Authority must ensure the notice is accurate and timely.

2. Fee review. Before approving a plan with a last resort supply fee, the Authority must satisfy itself that the fee reflects the supplier’s reasonable costs. It may request detailed cost breakdowns, audited accounts, or benchmark data. It should document its reasoning to avoid future challenges.

For small use customers:

1. Read the notices. A customer in a supply area where an order is made should check their mail and local newspaper for the Authority’s public notice and the supplier’s individual notice. If a grace period is available, the customer should act within the period to transfer to another supplier of their choice. If no grace period is offered, the customer must accept the transfer but can immediately start shopping for a new supplier and terminate the deemed contract after the notice period.

2. Review the deemed contract. The customer should request a copy of the supplier of last resort’s standard form contract and check the terms, especially the price, fee, disconnection provisions, and termination rights. If the terms are unfair, the customer may challenge them under the Australian Consumer Law.

3. Dispute the fee. If the last resort supply fee is imposed, the customer can ask the supplier to justify it. If the fee appears unreasonable, the customer can complain to the Authority or the relevant consumer advocate. However, the regulations do not provide a formal dispute mechanism - the customer would need to use the supplier’s internal complaints process, or the Energy and Water Ombudsman (if the supplier is a member), or ultimately seek a court determination.