Regulation, liability and small customer rights in the energy supply industry

Abstract

The transfer of energy and water utilities to private or state owned corporations raises important questions of service obligations, access, and dispute resolution for small end customers. The aim of this thesis is to explore the legal issues that confront small end users and service providers in what is a highly regulated market environment. This thesis examines the duties and obligations of energy service providers in terms of the product being fit for its expected purpose and in a manner not causing economic loss to the user. Correspondingly, the thesis examines also the rights and obligations of the user. These respective rights and liabilities of the parties are examined by reference to contracts law, consumer protection law under the Trade Practices Act, torts law and adjudication powers of the Ombudsman. The term "user' in this context refers to the small end-user, even though the analytical framework used in this thesis can, with appropriate modifications be also used in relation to others in the provider-user relationship identified here. With this in mind, the thesis examines: (1) whether the legal mechanisms created by national and state legislation and the regulatory regime have enhanced consumer sovereignty and reinforced small end customer rights relative to the old regime of franchised monopolies; and (2) whether, the legal tradition of reasonable care with its roots in interpersonal equity has been undermined by economic criteria. Despite Governments relinquishing ownership of production, transmission and distribution of energy supplies to the corporate sector, the State remains as a significant presence as a regulator of essential public utility services. Essential service utilities occupy too important a place in the social well being of society for governments to abandon them to the vagaries of market economics. Given the difficulties the courts have had of establishing reasonable care as applied to government or semi-government utilities, an important legal issue is, what is the appropriate standard of liability for negligence which should be applied to the highly regulated private and state owned service corporations which have no immunities under the Crown? In this regard, the thesis is concerned with the legal responsibility under both common law and statute to small end users for everyday power disturbances, failure to supply, and defective supply causing property damage or economic loss. In this context the basic arguments set out in the Thesis are as follows: Chapter 1 sets the background to the thesis. Chapter 2 examines regulation and the national electricity market with emphasis on the role of the Australian Energy Regulator, the Rules of the market and the liability exclusion clauses contained in the National Electricity Law. It argues that the complicated commercial and statutory structure of the market is beyond the legal ability of a small end user to challenge a negligent action of a market participant. Chapter 3 takes up the issue of whether under the Trade Practices Act 1974 (Cth) a strict liability regime should apply to service providers as argued in the Electricity Supply Association of Australia v Australian Competition and Consumer Commission case.1 It argues that electricity as "goods" (s. 4) should be subject to strict liability for defective supply. Chapter 4 examines standard form connection and supply contracts which are deemed (unseen and unsigned) to exist between service providers and small end customers. It concludes that liability exclusion clauses deny the small end customer common law contractual justice. Chapter 5 focuses on the impact of civil liability legislation in negligence, the rationalist concept of care and safety, and decision tree analysis in causation. It is considered that the legislation severely restricts the ability of the small end user to access the legal system when dealing with corporate energy providers. Chapter 6 looks at economic loss in respect of the loss of energy supplies. It argues that the common law regime does not assist the small end consumer as one of a large indeterminate class of plaintiffs who cannot recover. Chapter 7 examines the jurisdiction of the Energy Ombudsman scheme. It argues that whilst there is some scope to provide compensation to small end users, the capacity is both limited and small in amount. Chapter 8 provides some concluding arguments. The research concludes that the legal and regulatory mechanisms governing the disaggregated energy supply industry has failed to provide adequate protection for small end users. It is concluded that in the context of the existing regime, the small end user of energy services is not only disadvantaged but disenfranchised.

Date of Award	2007
Original language	English