INSIGHT

The CDR is coming to the energy sector – have your say now

By Phil O'Sullivan, Claudia Hall, James Daniel
ACCC Consumer law Cybersecurity & Privacy Data Energy Power Technology

In brief 5 min read

Following confirmation of the approach to be taken in the energy sector last year, the Government has commenced consultation on the Consumer Data Right (Energy Sector) Designation 2020, which will apply the Consumer Data Right (CDR) to the energy sector. The designation outlines the scope of the CDR within the sector, including categories of information that will be subject to the CDR regime (CDR Data), the energy market participants who will be required to provide access to, or transfer, CDR Data on request (Data Holders), and when requests must be made to AEMO as the gateway or directly to Data Holders.

Following the application of CDR in the banking sector, the rollout to the energy sector is a real chance to test whether the Australian approach, and benefits of data portability, can be easily transposed across sectors.

Entities should consider the impact of the CDR on their business, including whether they would like to apply to be an Accredited Data Recipient to obtain access to such energy data, and, if they are a Data Holder, whether their data governance processes and policies are appropriate to harness the opportunities presented by this development.

Key takeaways

  • On 6 May, the Government took the first major step in applying the CDR regime to the energy sector, releasing the draft of the initial energy sector designation instrument. Consultation on the draft designation instrument is open until 31 May 2020.
  • Treasury has stated it intends to finalise the designation instrument by 30 June 2020. Registration of the instrument, and application of CDR to the energy sector is likely to follow relatively soon after.
  • We expect the ACCC to release some specific CDR Rules (in particular to address the use of AEMO as a gateway), and consultation on the data standards for the energy sector is currently underway. However, the legislation, the majority of the rules and the enforcement approach for the regime have already been finalised.
  • The instrument designates four key categories of information as CDR Data: customer information (eg contact details or identification information), information about the sale or supply of electricity (eg energy usage data or billing information), information about electricity retail arrangements and information about natural gas retail arrangements.
  • CDR Data (as designated), may be subject to the CDR regime from 1 July 2018 (ie there is some retrospective application of the regime in the energy sector).
  • The Data Holders currently specified under the designation are AEMO, energy retailers and the Australian Market Regulator.

Recap – what's happening with the CDR?

The CDR is a key data portability reform that is intended to (eventually) be rolled out across the economy on a sector-by-sector basis. CDR in the banking sector is well on its way, with the ACCC's release of the Consumer Data Rules earlier this year. Consumer data sharing obligations commence for the Big 4 banks from 1 July 2020, and for non-major banks from either 1 November 2020 or 1 February 2021 (depending on accreditation status).

The energy sector is next, in line with a range of recommendations from regulatory reviews over the last couple of years. Energy data is highly valuable and strictly regulated, and it is anticipated that allowing customers to access and use their energy data through the CDR (including understanding their own consumption patterns) will improve competition between energy retailers.

Treasury has indicated it intends to finalise the initial energy designation instrument by 30 June 2020, and has flagged it is likely to expand the designation instrument in the future. Applying the CDR regime to a sector other than banking is a key step in proving the regime's value, and the value of data portability, on a broad scale – given most international regimes have, to date, focused on open banking. We expect there may be some complexities to navigate in ensuring that the general rules (which were developed along with the designation of the banking sector) work appropriately in the energy sector. There will be a balance in ensuring that the CDR rules and data standards developed for the energy sector are appropriately tailored so as to not cut across existing regulations and obligations in the sector, while still being similar enough to the banking sector to allow for a consistent and interoperable approach to the CDR regime overall. The data standards for the energy sector are currently being developed in consultation with the Energy Advisory Committee of the Data Standards Body.

Further, we expect that data recipients under the CDR regime, once accredited, will be able to access CDR data from any designated sector (currently, banking and energy), provided they require such information for the purposes of providing goods or services to the relevant CDR consumer. This may lead to an increase in the number of switching services or new energy retailers which seek to innovate and capitalise off broader access rights across sectors. For example, services available overseas such as Flipper, Weflip and Look After My Bills work by allowing customers to provide personal details and then switching electricity retailers automatically for the customer when a large enough saving is available.

What information will be CDR Data in the energy sector?

  • Information about a customer or their associate – information about a current or previous customer or their associate (whether that customer is an individual, corporation or government entity), that was provided by the customer or associate or obtained by the Data Holder, in connection with an arrangement for the sale or supply of electricity (including related goods or services). An associate of a customer could include their spouse or relative. This category of data may include:
    • information identifying the customer or their associate;
    • information about the customer's eligibility to enter or remain in the arrangement or take advantage of a feature of the arrangement; and
    • the contact details of the customer or their associate.
  • Information about sale or supply of electricity – information about the sale or supply of electricity and related goods or services to a current or former customer or their associate. This category was foreshadowed in the ACCC's consultation paper last year. This category includes:
    • information set out in the National Metering Identifier Standing Data Fields;
    • certain metering data;
    • Distributed Energy Resource (DER) Register data; and
    • billing information (eg bills, payment information, payment methods or information about a customer's account, authorisations for access to a customer's account, any concessional arrangements or applicable discounts).

Importantly, the designation instrument makes it clear that the scope of information under this category will include information about the sale or supply of any related goods or services which are provided as bonuses or add-ons to the supply of electricity. This could include, for example, discounts on movie tickets, frequent flyer points, or discounts on the supply of internet. This broad scope may increase the likelihood of third parties seeking to become accredited data recipients, in order to access and make use of such information.

As was the case for the banking sector designation, materially enhanced sale or supply information will be excluded from the scope of CDR Data. Information will generally be materially enhanced where:

  • it is derived through the Data Holder's application of insight or analysis; and
  • that insight or analysis renders the information significantly more valuable than the underlying information.

This exclusion only applies to general information about the sale or supply of electricity, and not to any data categories that are expressly specified within the designation instrument (for example, NMI standing Data Schedule fields, DER Register information, bills and amounts charged) will still be considered CDR Data, even if it has been materially enhanced.

  • Information about retail electricity or natural gas arrangements – information about new or existing arrangements for the supply or sale of electricity, and information about arrangements for the supply of natural gas (where the arrangement is available to a new prospective customer), including:
    • information identifying or describing the arrangement;
    • all costs associated with the arrangement;
    • any features or benefits (eg a discount received by the customer);
    • terms and conditions of the arrangement; and
    • eligibility criteria that must be met in order for a customer to enter or remain in the arrangement or take advantage of a particular feature.

What entities will be designated as Data Holders?

CDR obligations will apply to specified Data Holders whether they hold the CDR Data or the CDR Data is held on the entity's behalf. The initial Data Holders for the energy sector are:

  • The Australian Energy Market Operator (AEMO). AEMO is the Data Holder for NMI Standing Data Schedule information, certain metering data and DER register information.
  • Retailers are Data Holders for customer information, certain metering data, all other information about the sale or supply of electricity and tailored retail electricity arrangements.
  • The Australian Energy Regulator. The Australian Energy Regulator is a Data Holder for information about retail arrangements (other than tailored arrangements) and natural gas retail arrangements. Victoria Energy Compare may also be a Data Holder for this information if a relevant declaration is made under the Competition and Consumer Act 2010 (Cth).

As the CDR develops it will be important to consider the issue of 'reciprocity'. If an entity:

  • holds CDR Data (that wasn't disclosed under the CDR rules); and
  • is also an accredited data recipient for other CDR Data (e.g. banking data),

then that entity may be classified as a Data Holder of energy CDR Data. This could apply, for example, to a provider of a personalised budgeting application. If that provider has received CDR banking data as an accredited data recipient and also holds CDR energy Data (eg billing details for electricity) then that provider may be captured as a Data Holder in relation to that energy data. This is notwithstanding the provider would not have been designated as a Data Holder under the designation instrument. We expect the number of entities captured by these reciprocity provisions to increase as the ambit of the CDR expands across the economy.

What should I keep in mind?

The draft designation instrument specifies that AEMO will be the designated gateway for CDR Data that relates to customer information and information about sale or supply of electricity. A gateway model means that all requests for access to, or transfers of, energy CDR data will be made to AEMO – acting as a centralised pipeline – passing such requests on to the relevant Data Holder. This gateway model will not apply to NMI Standing Data information, certain metering data that is held by AEMO and DER information, nor will it apply to information about retail arrangements. In each such case, the relevant individual or accredited data recipient will need to make a request directly to the appropriate Data Holder.

The gateway approach differs from the economy-wide data access model used for open banking, and raised some concerns during the ACCC's 'access model' consultation, that AEMO could be a single source of failure, where it holds large amounts of valuable (and potentially sensitive) data.

The expansion of the CDR may also allow greater bundling of services with the creation of a more seamless customer service across different sectors. Businesses may be able to offer value by consolidating the large number of accounts (and associated fatigue) that modern consumers need to manage.

What's next?

  • Engage with the CDR's development. Stakeholders in the energy sector should:
    • participate in the consultation process to help ensure the CDR regime reflects the realities of the sector (including as the CDR regime may be expanded to other areas of the sector in the future), while also providing a strong and cost effective foundation for the sector to improve consumer outcomes;
    • consider making submissions on the draft designation instrument before 31 May 2020;
    • engage with the consultation process for the energy sector data standards conducted by the Data Standards Body – the consultation page is available on Github; and
    • prepare to provide input on energy-specific CDR rules when they are released by the ACCC.
  • Understand how the CDR regime works. Participants in the sector, or those who wish to obtain access to CDR Data in the energy sector, should develop a strong understanding of the practicalities of the CDR regime, to maximise the value and minimise the cost of its implementation in the sector. In particular, potential Data Holders should review their operations (including any contracts with metering businesses) in relation to the information which will be designated as CDR Data and consider which systems and processes they may need to develop to ensure they can comply with the CDR regime and respond to access and transfer requests.
  • Take steps to ensure compliance. For further information on the CDR regime, see our Insight: Top 10 things to know about the Consumer Data Right. For further details on the approach the regulators have adopted to enforce the CDR framework, see our Insight: Carrots and sticks: enforcement of the Consumer Data Right.