Implementation

In March 2010, Gas Industry Co submitted a recommendation to the Associate Minister of Energy and Resources that a retail contracts oversight scheme be established. On 12 May 2010, the Associate Minister advised her support for the retail contracts oversight scheme, and noted that she looked forward to receiving the assessments of industry alignment.

View 12 May letter from Associate Minister

There, we set out the process for conducting the baseline assessment and provide information about the steps required by Gas Industry Co, the independent assessor, and retailers.

Assessment overview

Using a set of outcome-based benchmarks, developed in consultation with the industry, an independent assessor will review retail gas contracts to determine their alignment with industry best practice.

Gas Industry Co has appointed Elwood Law Limited as the independent assessor. The principals of Elwood Law are lawyers who are skilled at interpreting contractual arrangements, and who have a great deal of experience with the gas industry. They are very conversant with the benchmark terms, having undertaken the contract assessment for the October 2009 consultation paper.

Baseline assessment

According to the recommendation, the first step in implementing this oversight scheme is to conduct a ‘baseline assessment’ of existing gas supply arrangements. The term ‘gas supply arrangements’ covers the published standard terms for gas retail supply contracts (whether residential or business), along with all ancillary documentation referenced in those contracts. The documents that are proposed to be reviewed by Elwood Law will be circulated to each retailer.

Where necessary, Gas Industry Co will provide Elwood Law with guidance as to the interpretation of the benchmark terms. Any guidance given will be included in the assessment reports.

Individual retailers will receive the baseline assessment results for their own contractual arrangements and they will be given an opportunity to comment on those draft reports before receiving final versions. None of the individual retailer reports will be published by Gas Industry Co. It is expected that these reports will help individual retailers better align their contracts with the benchmarks.

A consolidated report for the whole industry will then be submitted to the Associate Minister and published.

The timeline for implementing the baseline assessments is as follows: 

Next steps

For the purpose of the baseline assessments, as soon as possible and no later than 9 June 2010, Retailers are asked to:

• confirm whether the relevant table of documents for review (supplied to each retailer) is a complete and accurate description of all of their gas supply arrangements;

• provide any missing details of their gas supply arrangements, including internet links to documents available on their website;

• provide electronic copies of any documents that are part of their gas supply arrangements but which are not available on their website; and

• advise if any documents in the table will be amended before 15 June 2010.

[Note: providing this information is voluntary, but assessments will be made based on information available to the assessor].

Gas Industry Co is aware of the need to keep the burden of compliance activity to a minimum. As such, we are seeking to align the timing and ultimate objectives of our retail contract oversight with that of the Electricity Commission.

Subsequent assessments

The next assessment is scheduled to take place on or about 15 June 2011 (‘transitional’ assessment). Again, only the consolidated assessment for that review will be published.

If you have any questions about the scheme or this process, please do not hesitate to contact Jacki Eves at Gas Industry Co:

Phone: 04 494 2466

E-mail: jacki [dot] evesgasindustry [dot] co [dot] nz