CONSUMER UTILITIES ADVOCACY CENTRE LTD ANNUAL REPORT … · CUAC ANNUAL REPORT 2012/13 -2-Executive Officer’s report Driving energy prices down by getting good policy settings in

CONSUMER UTILITIES

ADVOCACY CENTRE LTD

ANNUAL REPORT 12/13

Mission

To ensure the interests of Victorian consumers, especially low-income, disadvantaged and rural and

regional consumers, are effectively represented in the policy and regulatory debate on electricity, gas

and water.

Values

▼ All Victorians have a right to affordable and sustainable electricity, gas and water;

▼ All Victorians have a right to have their interests heard in policy and regulatory decisions on

electricity, gas and water; and

▼ All Victorians have a right to not be disconnected from electricity, gas and water due solely to

inability to pay.

Corporate objectives

CUAC achieves its mission through its corporate objectives, which are:

▼ To facilitate and provide an independent, proactive and informed advocacy voice for

Victorian utility consumers in regulatory and consultation processes.

▼ To facilitate, undertake and disseminate research into consumer utility issues, with the aim of

enabling consumers to take full advantage of utility markets.

▼ To monitor grassroots consumer utility issues, particularly those affecting low-income,

disadvantaged and rural consumers.

CONSUMER UTILITIES ADVOCACY

CENTRE LTD. (CUAC)

Level 2, 172 Flinders Street

Melbourne, VIC 3000

Phone 03 9639 7600

Fax 03 9639 8966

Web www.cuac.org.au

ACN 100 188 752

Contents

Deputy Chair’s report 1

Executive Officer’s report 3

Consumer issues: energy 5

Consumer issues: water 10

Aboriginal Energy and Water Project 12

Advocacy activity 13

Communications 19

External research and advocacy program 20

Governance 21

Directors’ report 22

Auditor’s independence declaration 24

Independent auditor’s report to the members of CUAC 25

Directors’ declaration 27

Statement of Comprehensive Income for the year ended 30 June 2013 28

Statement of Financial Position as at 30 June 2013 29

Statement of Changes in Equity for the year ended 30 June 2013 30

Statement of Cash Flows for the year ended 30 June 2013 31

Notes to the Financial Statements for the year ended 30 June 2013 32

Deputy Chair’s report

Collegiate work with other community based

organisations has been a feature of CUAC’s

achievements in this financial year, spanning

collaborative submissions, advocacy and events.

The event Research Insights held in December 2012

showcased a substantial body of research work

undertaken by CUAC in this period including research

on door-to-door selling, consumer protections and

electricity re-selling, and research into energy market

concentration in Victoria. It also provided an

opportunity for CUAC research funding recipient, La

Trobe University, to share its report on rural seniors’

perceptions, attitudes & preferences relating to water

products and tariffs and for the Victorian Council of

Social Services to provide a progress report on its

research into water pricing.

The role of the Reference Group within CUAC’s

corporate governance structure is a fundamental one

in providing key advice to the CUAC Board about

emerging energy and water issues in the Victorian

community. The Board was particularly pleased,

therefore, that our review of the terms of reference and

establishment of a more transparent application

process was so successful in revitalising the functions

and representation of these members. We were

pleased that a core of previous participants reapplied

and thrilled to welcome new members including

Community Information and Support Victoria, Council

on the Aging, Council of Single Mothers and their

Children and Good Shepherd Youth and Family

Services. The first meeting of the new group was held

in May of this year and provided an opportunity to

hear about developments in the UK energy market via

a presentation by academic expert Dr Gill Owen, as

well as giving CUAC invaluable insights to assist the

development of its research and advocacy priorities for

the coming year. This was a great start and we hope to

finalise the annual plan early in the new financial year.

CUAC was also delighted to support two of its

community partners in the development of successful

applications for Department of Climate Change and

Energy Efficiency funding under the Low Income

Energy Efficiency Program. Based on CUAC’s research

report Wein, Paen, Ya Ang Gim: Victorian Aboriginal

Experiences of Energy and Water, the Kildonan

UnitingCare project seeks to address capital constraints

and information failure as barriers that prevent low

income Aboriginal consumers in Victoria from

improving their energy efficiency. The Springvale

Community Aid and Advice Bureau project also has a

focus on vulnerable consumers. It aims to trial energy

efficiency interventions within the local culturally and

linguistically diverse communities.

CUAC welcomed the appointment of the Minister for

Consumer Affairs Victoria, The Hon. Heidi Victoria

and the Minister for Energy and Resources, The Hon.

Nicholas Kotsiras in March this year, and looks

forward to working with both Ministers and their

departments. The Board also wishes to sincerely thank

the now Treasurer, The Hon. Michael O’Brien for his

significant support and engagement when previously in

those roles.

CUAC’s Board this year farewelled Chairperson Sylvia

Davey and Director Sandra Slatter. We are grateful for

their leadership and guidance during their time on the

Board. We were pleased to welcome Andrew Bell as a

Director. Andrew is well-qualified for this role with

experience at the Australian Competition and

Consumer Commission in addition to his current career

as a barrister with the Victorian bar.

This year has seen unprecedented demand for CUAC’s

views and input at regulatory and industry events and

in consultation processes and reviews. This report

highlights the extent of CUAC’s influence and effective

representations across a broad range of government,

regulatory and industry activity. Together with its

-1- CUAC ANNUAL REPORT 2012/13

proactive research output, this adds up to an

astounding amount of work given the size and

resources of the organisation.

My thanks go to the Directors of the Board for their

insight, support and enthusiastic engagement over the

year. On behalf of the Board, I wish to thank the

Executive Officer and the CUAC team for their loyalty,

energy and substantial work during the year.

Fanoula Ferro

Deputy Chair

CUAC ANNUAL REPORT 2012/13 -2-

Executive Officer’s report

Driving energy prices down by getting good policy

settings in place has been a major focus of CUAC’s

research and advocacy during 2012/2013.

Continuing our advocacy on network costs, CUAC

welcomed the Standing Council on Energy and

Resources (SCER) Review of the Limited Merits Review,

meeting with and making submissions to the Expert

Panel and government advisers ahead of the

announcement of the new decision-making framework,

expected towards the end of 2013.

Our research into market concentration in Victoria also

added weight to ongoing concerns that choice of

retailer alone does not necessarily deliver lower retail

prices. Our paper Market power in the Victorian retail

energy market confirmed that market concentration

remains high, particularly in the gas market, despite

continuing strong market churn rates. We therefore

welcomed the Essential Services Commission’s research

paper on electricity retail margins, released in May.

The findings confirmed our concerns that retail margins

in electricity had increased, rather than decreased,

since full retail price deregulation in Victoria in 2009.

We believe that more national research is needed in

order to fully identify the drivers and to develop

appropriate policy solutions to address cost of living

pressures and affordability.

We were pleased that the policy platform adopted by

the state government in its roll-out of smart meters and

flexible pricing largely reflects CUAC’s advocacy for a

voluntary approach to flexible pricing combined with a

proactive government communications campaign and

an independent comparator site. CUAC believes that to

make good retail energy choices, consumers need an

independent comparator site which can accurately

analyse offers and help consumers to identify the best

deals based on individual households’ consumption

patterns and capacity to change energy use

behaviours.

The announcement of the Energy Information Fund to

assist not-for-profit organisations to develop and

deliver information to multicultural, disadvantaged and

vulnerable consumers was the culmination of a number

of years of CUAC advocacy, and we commend the

Minister for Energy and Resources, The Hon. Nicholas

Kotsiras, for this initiative. CUAC is very pleased to be

developing a project to support agencies in this work

including the establishment of the energyinfohub

website. The website will provide a “go to” resource

for organisations that deliver direct services such as

emergency relief, financial counselling and information

and support.

Our proactive research agenda has delivered some

substantial outcomes this year. Our research into fixed

term contracts revealed consumer dissatisfaction with

the current rules. Consumers face search costs when

they look for a better deal, but fixed term contracts that

allow price increases and impose exit fees can quickly

undo any advantage, undermining the value of

switching efforts. In the coming year, CUAC, together

with Consumer Action, will seek change to rules that

allow such contracts.

Our door-to-door research added to national and

Victorian understanding of consumer detriment and

contributed to regulatory prioritisation and action. Our

research into the growing phenomenon of energy re-

selling (where consumers buy electricity from a re-seller

rather than a licensed retailer) in high rise

developments has informed the development of the

Australian Energy Regulator’s guidelines, and has

been identified by the Victorian government as an

issue to be addressed.

Ensuring the regulatory framework maximises effective

consumer participation and protects the vulnerable is a

central tenet for CUAC. Over the course of this year we

have worked to ensure that important consumer

protections are maintained during the transition

process to harmonise the Victorian Energy Retail Code

and Guidelines with the National Energy Customer

Framework.


The pass-through of desalination costs to consumers

was always going to make the Water Price Review for

2013—2018 a difficult one. As it happened, eighty-

five percent of the price increases proposed to the

Essential Services Commission (ESC) by the

metropolitan water retailers and Western Water were

due to the desalination plant. CUAC worked with

industry to improve consumer engagement and

hardship provisions and, because of the extent of the

proposed price increases, advocated in submissions to

the regulator for further improvements. We were very

pleased when the ESC allowed an additional

$5,250,000 million over five years to assist customers

to manage the price increases. We are keen to

continue to work with the industry to develop measures

for support to customers who find themselves in

payment difficulty and hardship.

For some years now CUAC has been advocating for

increased funding to support the establishment of a

national energy advocacy body, starting with a joint

research project with Consumer Action and followed

by joint auspice of a national proposal to the SCER. In

this period we engaged with and presented joint

submissions to the expert lead consultation process

established by SCER. Happily, SCER has announced in

-principle support for the establishment of this body by

July 2014. CUAC will continue to work with other

consumer organisations towards an effective and

independent structure.

Fanoula Ferro has already pointed to the importance

of our collaborative work with the community sector. I

am very proud that this has contributed to two

organisations’ successful project applications to the

Low Interest Energy Efficiency Program (LIEEP). The

announcement of just over $6 million dollars for the

Kildonan UnitingCare Koori Energy Efficiency Project

in partnership with Koori agencies and CUAC was a

great outcome. We are looking forward to working

closely with all of the organisations over the three

years of implementation.

CUAC also assisted the Springvale Community Aid

and Advice Bureau in the development of its successful

LIEEP application, which will provide more than $2

million for a large program testing the effectiveness of

a range of energy efficiency interventions targeted at

low-income clients from diverse cultural and linguistic

backgrounds. We congratulate both of these

organisations and wish them the best in achieving

great outcomes for vulnerable Victorians.

In addition to our work advocating on the findings and

recommendations of our research, our small and

dedicated team at CUAC combined to produce 20

submissions, to represent CUAC on 27 government,

regulatory, industry and consumer committees, and to

deliver 22 presentations to conferences and events

around the country. I would like to thank Deanna

Foong, David Stanford (who took up a new position

with the VCOSS in the last part of the financial year)

and Caitlin Whiteman for their incredibly hard work

and great outcomes. Caitlin has moved to head up the

energyinfohub Project in the coming year, and we

have therefore welcomed Martin Jones and Loren Days

to our team and look forward to their contributions in

2013/14.

My thanks also go the CUAC Board Directors,

particularly Chairperson Sylvia Davey and Deputy

Chair Fanoula Ferro, for their great support.

Jo Benvenuti

Executive Officer


Consumer issues: energy

Smart meters and flexible

pricing Flexible pricing

CUAC was heavily engaged in policy and regulatory

processes relating to the Victorian smart meter roll-out

throughout 2012/13, participating in meetings of the

the Advanced Metering Infrastructure (AMI) Ministerial

Advisory Council, Regulatory Working Group and

Communications Working Group. CUAC also

responded in writing to Department of State

Development, Business and Innovation (DSDBI)

(formerly Department of Primary Industries) papers on

flexible pricing and metering contestability.

For some time, CUAC has argued that flexible pricing

should be voluntary, and that consumers who try a

flexible tariff should, if they find it unsuitable, be able

to return to their previous flat tariff without penalty. We

have also advocated for consumers’ access to their

own consumption data, and for provision of an

independent price comparator capable of comparing

offers on the basis of this data.

We therefore welcomed Victorian Government

decisions to ensure that flat tariffs continue to be

offered, to require customers’ explicit informed consent

to flexible tariffs, and to see that retailers and

distributors supply customer smart meter data at no

charge. In 2012/13, CUAC also welcomed and gave

feedback on the development of the Government’s

independent price comparison website.

Metering contestability

Victoria’s derogation to the National Electricity Rules,

which supports Victoria’s smart meter rollout, will

expire on 31 December 2013. With the expiry of this

derogation, Victoria may see the introduction of

contestability in those metering and data services that

are currently provided only by distributors.

In April 2013, CUAC raised concerns about the risk

that metering contestability, at this time, could create

consumer confusion and jeopardise the realisation of

benefits from the mandatory smart meter roll-out. We

argued for a cost-benefit analysis that would take into

account the customer experience of the roll-out. We

welcomed the Minister for Energy and Resources’ June

2013 request for an extension of the derogation. The

request articulated many of the concerns we had

raised about metering contestability.

National smart meter processes

In November 2012, the Standing Council on Energy

and Resources’ (SCER) Energy Market Reform Working

Group released its final report on smart meter

customer protections. This report reflected some of the

suggestions that CUAC made previously in 2009 and

2012.

Drawing on our knowledge of the Victorian smart

meter roll-out, in June 2013 we provided a further

submission on national smart meter issues, this time

regarding the draft Statutes Amendment (Smart

Meters) Bill 2013.

Energyinfohub project

Over several years of involvement in smart meter

issues, CUAC has been advocating for consumer

education and information initiatives to accompany the

roll-out of this new technology and its associated

reforms. We have also argued that such initiatives must

include disadvantaged consumers.

In early 2013, DSDBI decided to create an Energy

Information Fund (EIF). The EIF will give grants to not-

for-profit organisations to adapt, develop and/or

deliver information to multicultural, disadvantaged,

vulnerable and hard-to-reach Victorian consumers. The

Fund’s objective is to educate and empower these

consumers to make informed decisions about energy.


Over January to June 2013, CUAC worked closely

with the Department to refine design of the EIF.

Following a CUAC proposal, in April 2013, the

Department also approved funding for a 12-month

CUAC project designed to support implementation of

the EIF. The project will see CUAC promoting the EIF to

community sector organisations, offering support

during both the application and delivery phases, as

well as facilitating community sector feedback to the

Department.

CUAC will also be producing resources, including a set

of community worker energy guides, each with

associated tools and resources (such as brochures,

videos and posters). Fund applicants and other

community organisations will be able to use and/or

adapt these materials in their activities with clients and

members. In addition, CUAC will develop an

‘energyinfohub’ website that provides information

about applying to the EIF and houses a repository of

CUAC’s guides, EIF outputs and other high-quality

energy consumer education materials.

Over the April—June 2013 period, CUAC began

engagement work, meeting and discussing the EIF and

CUAC project with several community and consumer

organisations. We also developed a Terms of

Reference for an EIF Advisory Reference Group and

planned its first meeting.

CUAC also began work on resource development in

the 2012/13 financial year. We planned the

energyinfohub website’s name, branding, look and

feel and features, and put together a Request for

Quotation for website build. CUAC also began

planning and drafting its suite of community worker

guides.

Retail energy market

Market concentration

In December 2012, CUAC completed an analysis of

concentration in Victorian retail energy markets. As

detailed in our policy issues paper, Market power in

the Victorian retail energy market, the research found

that concentration remains high some years after price

de-regulation, particularly in gas and business

markets.

In early 2013, CUAC met with stakeholders to discuss

the research findings and their implications for

competition effectiveness. This advocacy included

several high-level meetings with DSDBI, the Australian

Competition and Consumer Commission (ACCC), the

Australian Government Department of Resources,

Energy and Tourism (DRET), the Australian Energy

Regulator (AER), the Office of the Prime Minister and

the Victorian Minister for Energy and Resources.

Fixed term contracts

Over 2012/13 CUAC advocated for regulatory reform

to make energy retail contracts fairer for consumers.

This work focused on retail contracts that combine a

fixed term of up to 36 months, the ability for retailers

to increase prices during the term, and the imposition

of exit fees for early termination.

In late 2012, CUAC surveyed Victorian consumers on

their experiences and opinions regarding fixed term

contracts. This survey found overwhelming support for

regulatory reform. Subsequently, CUAC developed two

papers calling for regulation to prevent energy retailers

increasing tariffs during fixed term contracts with exit

fees. We circulated these papers and advanced our

reform proposals in meetings with the Essential

Services Commission (ESC) and the Minister for Energy

and Resources.

Continuing our work on fixed term contracts, in 2013

CUAC together with the Consumer Action Law Centre

(Consumer Action) applied for Consumer Advocacy

Panel funding for a project that will seek a change to

the National Energy Retail Rules preventing unilateral

variation of prices/tariffs in contracts. This application

was approved in June 2013.

Price comparison and switching services

Following on from earlier research into the accuracy

and reliability of energy retail price comparison and

switching websites, in July 2012 CUAC finalised

development of a set of principles for a voluntary code

of practice for such sites. These principles were

endorsed by 12 consumer and community

organisations and circulated to government, regulatory

and industry stakeholders.


We began work establishing a working group to

progress development of the voluntary code, gaining

general support from some switching site operators

and from Energy Assured Limited (EAL), the existing

self-regulatory scheme on energy door-to-door selling.

CUAC will continue work on the code in 2013/14.

Door-to-door selling

Throughout 2012/13, CUAC continued to advocate on

door-to-door selling issues through our submission,

committee and research work. We represented

consumer views on the EAL Stakeholder Working

Group and Consumer Affairs Victoria (CAV) Energy

Marketing Working Group. In August 2012, CUAC

made a submission to the House of Representatives

Standing Committee on Social Policy and Legal Affairs

in support of the proposed Do Not Knock Register Bill

2012.

In November 2012, CUAC completed a research

project evaluating the effectiveness of the range of

policy approaches to door-to-door selling. The

research report, Minimising consumer detriment from

energy door-to-door sales, was launched at CUAC’s

December 2012 Research Insights event.

Subsequently, CUAC met with national and Victorian

regulators, government, industry and other consumer

groups to advocate on the basis of the report’s findings

and recommendations. In line with one of these

recommendations, EAL committed to making data

about the self-regulatory scheme’s implementation and

outcomes available at more regular intervals. Prompted

by another recommendation in CUAC’s report,

Consumer Action developed an online system enabling

consumers to quickly and easily opt out of door-to-

door selling by requesting addition to all retailers’ ‘No

Contact’ lists.

National Energy Customer

Framework

During 2012/13, CUAC continued to advocate for the

retention of key Victorian consumer protections in the

implementation of the National Energy Customer

Framework (NECF).

In August 2012, CUAC wrote to the Prime Minister, the

Australian Government Minister for Energy, and DRET

highlighting our concerns that NECF implementation

would mean a diminution in protections for Victorian

consumers. We argued that any national regime

should aim to deliver best practice consumer

protections. We reiterated these positions in a

submission and public hearing presentation to the

Senate Select Committee on Electricity Prices.

In December 2012, the ESC began consultation on the

harmonisation of the Energy Retail Code and

Guidelines with the NECF. CUAC played a lead role in

preparing a joint consumer and community

organisation response, submitted in February 2013.

We offered in-principle support for harmonisation, but

expressed concern about aspects of the proposed

Energy Retail Code Version 11 which, if implemented,

would lower protections for Victorian energy

consumers. CUAC also raised these concerns at the

Commission’s workshop in May 2013.

Distribution pricing

Limited Merits Review

In 2012/13, CUAC continued its advocacy for reform

of the Limited Merits Review Regime, making two

submissions to the SCER’s ongoing Review of the

Limited Merits Review Regime. We made two

submissions on the process and gave feedback to the

Review’s Expert Panel on their initial proposals. We

also presented on the Limited Merits Review regime at

the ACCC’s July 2012 Regulatory Conference, and

advocated directly to the Prime Minister and SCER

ministers, calling for quick action to reform the regime.

In June 2013, the SCER released a Consultation Draft

Legislation for the National Electricity and Gas Laws,

along with its decision Regulation Impact Statement.

The legislation contained several provisions that CUAC

had lobbied intensively for. Among these were

provisions prohibiting network businesses passing

review costs through to consumers and requirements

that the Australian Competition Tribunal give regard to

consumer views and only make decisions that are

materially preferable for consumers’ long-term

interests. CUAC attended a public forum on the draft

legislation, and will prepare a written submission in

2013/14.


Network regulation rules

In February 2013, the AER appointed CUAC to the

Consumer Reference Group (CRG) for its Better

Regulation Program, which aims to develop new

guidelines to support the implementation of the recently

revised network pricing rules and the Power of Choice

review.

CUAC attended a number of CRG meetings in 2013,

and also met with the CEO and Chair of the AER to

discuss the Better Regulation Program. Our initial

advocacy in this area focussed on the work streams

relating to confidentiality, network service provider

engagement with consumer organisations, and

implementation of the Power of Choice review.

CUAC also participated in an Australian Energy

Market Commission (AEMC) consultation forum on

forecasting energy demand for the purposes of setting

network prices. This will feed into AEMC advice to the

SCER.

CUAC met with SP AusNet regarding their

transmission pricing submission to the AER, discussing

approaches that SP AusNet can use to better engage

with the community on both their transmission and

distribution operations.

Re-selling

In November 2012, CUAC finalised its research into

energy re-selling with publication of the report

Growing gaps: consumer protections and energy re-

sellers. The report, which was launched at CUAC’s

Research Insights event in December 2012, identified

gaps in consumer protections for consumers who buy

their electricity from a re-seller, rather than from a

licensed energy retailer.

This work established CUAC as an expert in energy re-

selling. Following the launch, the ESC forwarded the

research report to WINenergy, which then sought a

meeting with CUAC. CUAC was also invited to meet

with the AER and discussed the research findings and

recommendations with the Minister for Energy and

Resources. Government is aware of the issues

surrounding energy re-sellers and is now considering

how these might be addressed.

CUAC also drew upon the findings from this research

in submissions to the ESC on two re-sellers’

applications for retail licenses, and in response to the

AER’s consultation on its revised Retail Exempt Selling

Guideline.

Consumer advocacy

National Energy Consumer Advocacy Body

Over recent years, CUAC has been advocating for

funding to support the establishment of a national

energy advocacy body. In 2012/13, we jointly

auspiced a national consumer sector proposal to the

SCER. We participated in the SCER’s national

consumer advocacy body consultation process,

presenting a joint submission and engaging with the

expert reviewers.

Following a report from the reviewers, in May 2013

the SCER agreed in principle to establish such a body,

with initial set up from 1 July 2014. Coming after

years of research and advocacy, this was a milestone.

SCER has asked officials to develop a detailed

implementation plan for SCER’s consideration by the

end of 2013. This process may involve further

stakeholder consultation, in which CUAC will be an

active participant.

Consumer engagement

In May and June 2013, CUAC began work on a

research project investigating best practice in consumer

engagement. Drawing on a literature review and

qualitative interviews with consumer advocates, CUAC

will develop a set of consumer engagement principles

to assist industry, regulators and government.

Energy efficiency

In 2012/13, CUAC was a participant in the One

Million Homes Alliance, a coalition of Victoria-based

consumer, social welfare, energy and environmental

organisations that advocates for investment in energy

and water efficiency of Victorian housing stock. We

contributed to development of the Alliance’s strategy

and its research and advocacy work.

During the year, we also worked with Kildonan

UnitingCare and the Springvale Community Aid and


Advice Bureau in support of their successful

applications for Australian Government Department of

Climate Change and Energy Efficiency funding under

the Low Income Energy Efficiency Program.


water businesses be permitted to allocate $5.25 million

to support customers experiencing hardship. In June

2013, CUAC participated in the Vulnerable Customer

Taskforce Innovation workshop, discussing existing and

potential approaches to affordability. We will continue

to work with water businesses to explore options to

target assistance to people in payment difficulty.

Finally, following the Commission’s final decision,

CUAC joined with other consumer and community

organisations in calling for a review of the water

concessions framework in light of the coming price

increases.

Melbourne Water over-recovery

At the close of the 2011/12 financial year, CUAC

(with endorsement from a number of consumer and

community organisations) had written to the Minister

for Water and the Chairperson of the ESC regarding

Melbourne Water’s over-recovery of revenue due to

delays in construction of the desalination plant.

Subsequently, the Commission has been overseeing the

return of monies to customers. In line with CUAC’s

suggestion that the ESC review its mechanisms for re-

opening price determinations, the Commission now

has greater flexibility to re-open determinations where

an uncertain or unforseen event has a material impact

on previously approved prices.

Payment difficulties and

hardship

Debt management powers

For a number of years, rural and regional urban water

businesses have had debt recovery powers including

the power to charge interest on overdue accounts and

to place a charge on properties. In the previous

financial year, the Water Amendment (Governance

and Other Reforms) Bill 2012 extended those debt

recovery powers to the metropolitan water businesses.

Consumer issues: water

Pricing

2013—2018 Water Price Review

During 2012/13, CUAC continued to be heavily

involved in the Essential Services Commission’s (ESC)

2013—18 Water Price Review, providing three joint

submissions to the Commission. CUAC’s advocacy

focused on the greater Melbourne area because of the

steep price increases of up to 32 per cent proposed by

metropolitan water businesses.

CUAC’s submissions to the Water Price Review process

had urged the ESC to closely scrutinise water

businesses’ proposed operating and capital

expenditures. The Commission’s final decision,

released in June 2013, identified $1 billion in savings,

constraining price increases to between 12 and 25 per

cent over the regulatory period.

Together with other consumer advocates, CUAC had

urged the Commission to consider directing

Melbourne Water to spread the cost of desalination

plant payments over the 50-year life of the plant,

rather than the 27 years proposed. This would have

seen costs met by those consumers benefiting from the

plant, helping to reduce costs for current customers.

The ESC’s Draft Decision required Melbourne Water to

reconsider and resubmit its proposals after consulting

with consumers. In its Final Decision, the Commission

approved the plan to recoup costs over 27 years.

However, it will revisit the issue after three years.

In addition to submissions to the ESC, CUAC engaged

directly with businesses on their Water Plans. We

provided written feedback on plans, met with business

staff and consultants, and, in May 2013, participated

in a Melbourne Water workshop.

Throughout the Water Price Review process, CUAC’s

submissions and engagement highlighted the need to

support low income and vulnerable customers, who

will be most impacted by price rises. We welcomed the

Commission’s proposal that the greater metropolitan


During 2012/13, CUAC focused on ensuring that in

the regulation of these powers, the ESC developed

appropriate protections for customers experiencing

payment difficulty and financial hardship. In response

to the Commission’s Consultation Paper and Draft

Decision, CUAC led two joint submissions, both

endorsed by other consumer and community

organisations. We argued that concession cardholders

and customers experiencing financial hardship should

not be subject to interest charges. This proposal was

adopted by the ESC and incorporated into the

regulations.

Urban water policy

Office of Living Victoria Environment and

Community Taskforce

Over the previous two financial years, CUAC had

been engaged in consultation processes that led to the

development of the Government’s Living Melbourne,

Living Victoria policy, and to the formation of the

Office of Living Victoria. The Office of Living Victoria

reports to the Minister for Water and is charged with

implementing the Living Melbourne, Living Victoria

policy, a whole-of-system approach to planning and

servicing Victoria’s urban water needs.

In 2012/13, CUAC was asked to participate in the

Office of Living Victoria’s Environment and Community

Taskforce, which will consider the environmental and

social policy issues associated with developing and

implementing an integrated water cycle management

approach in Melbourne and regional Victoria. CUAC

is looking forward to participating in the taskforce

along with other community organisations.

National urban water policy

As a member of the Urban Water Stakeholder

Reference Panel, CUAC continued to provide expert

consumer advice to the Australian Government on the

design and implementation of urban water programs

for cities and towns. The panel has considered and

provided advice on a range of matters, including:

National Urban Water and Desalination Plans; the

National Water Security Plan for Cities and Towns; the

Water Efficiency Opportunities Program and the

Council of Austalian Governments’ Work Program on

Water.

Water efficiency

The national Water Efficiency Labelling and Standards

(WELS) scheme requires certain products to be

registered and labelled with their water efficiency,

thereby helping consumers to save water and energy

and reduce household bills. The Water Efficiency

Labelling and Standards Advisory Group (WELSAG)

was established in 2011 following an independent

review of the WELS scheme. CUAC took part in that

review and was subsequently appointed to WELSAG

by the then Parliamentary Secretary for Sustainability

and Water, the Hon. Don Farrell. Throughout

2012/13 CUAC, as a member of the WELSAG,

provided advice on strategic directions,

communications and marketing, compliance and

enforcement.


http://www.environment.gov.au/water/policy-programs/cities-towns/index.html

http://www.environment.gov.au/water/policy-programs/weo/index.html

Aboriginal Energy and Water Project

In 2012/13, CUAC continued work on projects

flowing from our December 2011 research

reportWein, Paen, Ya Ang Gim: Victorian Aboriginal

Experiences of Energy and Water.

Koorie Energy Efficiency

Project

In early 2012, CUAC had partnered with Kildonan

UnitingCare and other organisations to develop a

consortium submission to the Low Income Energy

Efficiency Program (LIEEP), seeking funding for a

Koorie Energy Efficiency Project (KEEP). The

application and project design drew on findings from

CUAC’s 2011 research. In December 2012, the

Department of Climate Change and Energy Efficiency

awarded just over $6 million in funding for the project.

The KEEP aims to address capital constraints and

information failure as barriers that prevent low income

Aboriginal consumers in Victoria from improving their

energy efficiency. The project will trial a range of

strategies to assist the consumers manage energy use

and costs, including tailored educational tools,

information sessions, community consultation, energy

assessments and retrofits. The data collected will be

used to assess the effectiveness of projects aimed at

causing energy efficiency improvements within

targeted communities.

As a member of the KEEP Partnership Group in

2012/13, CUAC contributed its expertise to initial

implementation of the project, and drew on its

partnerships to invite involvement from Aboriginal

community leaders.

Consumer information

materials

In June 2013, CUAC designed and developed a

brochure and set of appliance magnets that provide

energy and money saving tips tailored to the Victorian

Aboriginal community. In 2013/14, CUAC plans to

distribute these materials to both Melbourne and

regional Victorian Aboriginal agencies and

communities that assisted with, or participated in, the

2011 Aboriginal Energy and Water Project research.

Reconciliation Action Plans

In May and June 2013, CUAC undertook initial

planning for a water businesses’ Reconciliation Action

Plans workshop. The aim of this work is to support

water businesses to develop Reconciliation Action

Plans, enabling improved relationships and outreach

with Victorian Aboriginal communities.


Advocacy activity

Submissions

During 2012/13, CUAC made 20 individual or joint

submissions on consumer utilities issues, mostly

directed towards Victorian and national regulators. A

majority of these submissions dealt with energy issues,

with pricing and consumer protections two key areas

of focus. CUAC made six submissions on water issues,

covering pricing and consumer protections.

Energy consumer protection

Date To Issue

07.08.2012 House of Representatives Standing

Committee on Social Policy and

Legal Affairs

Inquiry into the Do Not Knock Register Bill 2012

19.12.2012 Australian Energy Regulator AER Retail Exempt Selling Guideline

13.02.2013 Essential Services Commission Harmonisation of Energy Retail Codes and Guidelines with the National Energy

Customer Framework—Consultation Paper (joint submission)

Energy monitoring & compliance

Date To Issue

26.04.2013 Essential Services Commission Guideline 22: Regulatory Audits of Energy Businesses—Draft Decision

Energy pricing

Date To Issue

02.07.2012 Department of State Development,

Business and Innovation Introduction to Flexible Pricing—Position Paper (confidential submission)

27.08.2012 Expert Panel for the Review of the

Limited Merits Review Regime

Stage 2 of the Review of the Limited Merits Review Regime—Discussion Paper

12.09.2012 Senate Select Committee on

Electricity Prices

Inquiry into Electricity Prices

08.02.2013 Standing Council on Energy and

Resources

Limited Merits Review— Regulatory Impact Statement


Business and Innovation Flexible Pricing Implementation—Implementing the Flexible Pricing Consumer Protections

by Order in Council (confidential submission)


Energy consumer advocacy

Date To Issue


Resources

Proposal for a National Energy Consumer Advocacy Body– Preliminary Statement of

Issues and Questions for Consultation (joint submission)

Water consumer protection and hardship

Date To Issue

10.08.2012 Essential Services Commission Monitoring the return of the unrequired desalination payments

21.09.2012 Essential Services Commission Water Customer Service Codes Review 2012 Regulation of Debt Management Powers—

Consultation Paper (joint submission)

16.11.2012 Essential Services Commission Water Customer Services Codes Review 2012: Regulation of Debt Management

Powers—Draft Decision (joint submission)

Water pricing

Date To Issue

24.08.2012 South East Water Addendum to South East Water’s Draft 2013-2018 Water Plan

25.01.2013 Essential Services Commission Water Price Review 2013-2018 (joint submission)

21.05.2013 Essential Services Commission Price Review 2013: Greater Metropolitan Water Businesses—Draft Decision (joint

submission)

Licensing

Date To Issue

25.07.2012 Essential Services Commission WINenergy Retail Pty Ltd Application for Electricity Retailer Licence

12.12.2012 Essential Services Commission WINenergy Application for Electricity Retailer Licence


Date To Issue


Business and Innovation Transitional Arrangements for the Expiry of the Victorian AMI Derogation – Consultation

Paper (confidential submission)


Resources Statutes Amendment (Smart Meters) Bill 2013

Smart meters

Committee representation

Staff represented CUAC on the following groups in

2012/13:

Area Body Group

Government

Consumer Affairs Victoria Energy Marketing Working Group

Consumer Affairs Victoria Working Together Forum

Federal Government Department of Sustainability,

Environment, Water, Population and Communities

Urban Water Stakeholder Reference Panel

Federal Government Department of Sustainability,

Environment, Water, Population and Communities

Water Efficiency Labelling and Standards Scheme Advisory Group

Victorian Government Department of State Development,

Business and Innovation

Advanced Metering Infrastructure Ministerial Advisory Council



Advanced Metering Infrastructure Regulatory Working Group



Advanced Metering Infrastructure Communications Working

Group

National Health and Medical Research Council Water Quality Advisory Committee

Victorian Government Department of Health Safe Drinking Water Reference Group

Regulatory

Australian Energy Regulator Customer Consultative Group

Australian Energy Regulator Consumer Reference Group

Essential Services Commission Customer Reference Panel

Industry

Origin Energy National Customer Consultative Council

SP AusNet Stakeholder Consultative Committee

Jemena Stakeholder Consultative Committee

United Energy and Multinet Gas Customer and Community Consultative Committee

- National Energy Industry and Consumer Forum

South East Water Customer Advisory Committee

Water Services Association of Australia Urban Water Policy Project Stakeholder Reference Group

Energy Assured Energy Assured Stakeholder Working Group

Smart Utilities Stakeholder Working Group


Community

sector

Consumers’ Federation of Australia Executive Committee

Australian Communications Consumer Action Network Standing Advisory Committee on Consumer Affairs

Victorian Council of Social Service Utilities Working Group

- National Consumer Roundtable on Energy

- One Million Homes Alliance

Kildonan UnitingCare Koorie Energy Efficiency Project Partnership Group


Presentations

During 2012/13, CUAC made 22 presentations on

energy and water issues to a broad range of

community sector, government, industry, and

community audiences.

Date Event Title

11.07.2012 Council on the Ageing Australia (Victoria), Need to

Know session

How will the carbon tax impact on you?

18.07.2012 Energy Roundtable, Research Showcase Aboriginal Energy and Water Project

27.07.2012 Australian Competition and Consumer Commission,

Regulatory Conference

The involvement of consumers in reviews by the Australian

Competition Tribunal of Australian Energy Regulator revenue

determinations

22.08.2012 National Seniors Austalia, Knox branch meeting Smart meters and saving money on my energy bill

29.08.2012 Australian Energy Market Commission, Public Forum

on Strategic Priorities for Energy Market Development

Strategic priorities for energy retail market development

29.08.2012 Society of Consumer Affairs Professionals Australia,

International Symposium

Addressing key issues facing the sector

30.08.2012 Society of Consumer Affairs Professionals Australia,

International Symposium

The people who don’t complain (panel discussion)

23.10.2012 Kildonan UnitingCare Industry Day

CUAC’s Victorian Aboriginal Experiences of Energy and Water –

research findings and recommendations

20.11.2012 Smart Utilities Australia New Zealand Tackling energy poverty in Australia: a consumer perspective

20.11.2012 Smart Utilities Australia New Zealand Interactive Industry Session: Retailers and Distributors Roundtable

3.12.2012 CUAC, Research Insights Minimising consumer detriment from energy door-to-door sales

3.12.2012 CUAC, Research Insights Concerning concentration: market power in the Victorian retail

energy market

3.12.2012 CUAC, Research Insights Growing gaps: consumer protections and energy re-sellers

22.01.2013 National Energy Industry and Consumer Forum The Energy Consumers Australia proposal

8.02.2013 Essential Services Commission, Staff Planning Day How does the Essential Services Commission look to the external

world?

14.03.2013 Council on the Ageing Victoria Energy consumer issues


Consumer Congress

Energy markets and consumers: a crystal ball (panel discussion)


Consumer Congress

Minimising consumer detriment from energy door-to-door selling

23.05.2013 Power Pricing 2013 The challenges of flexible pricing (panel discussion)


23.05.2013 Power Pricing 2013 Smart meters and consumer acceptance (panel discussion)

28.05.2013 Credit and collections in energy and water 2013:

Balancing commercial obligation with social

responsibility

Examining the research to assist in delivering improved services to

disadvantaged customers

03.06.2013 Australian Energy Market Commission, Strategic

Planning event

Australian Energy Market Commission consumer priorities and

perspectives


Communications

Website

During 2012/13, CUAC continued to maintain its

recently re-developed website. The website houses all

CUAC public submissions, research reports, policy

papers, presentations and media releases, as well as

key corporate documents. CUAC’s website is

supported by a Twitter account, which was used during

2012/13 to disseminate CUAC work, share news

relevant to Victorian energy and water consumers and

comment on policy and regulatory developments.

CUAC newsletter

POWER+WATER

During 2012/13, CUAC continued publication of its tri

-annual newsletter, POWER+WATER.

The newsletter targets both specialist and non-specialist

audiences with news about CUAC’s advocacy and

research work as well as state and national policy

developments relevant to Victorian energy and water

consumers.

POWER+WATER is disseminated via social media and

distributed directly to government, regulatory,

community and industry stakeholders. During

2012/13, each issue was downloaded from the CUAC

website an average of around 340 times.

Reports and papers

CUAC published two major research reports in

2012/13:

Growing gaps: consumer protections and

energy re-sellers (December 2012)

Minimising consumer detriment from energy

door-to-door sales (December 2012)

CUAC also produced a Policy Issues Paper:

Market power in the Victorian retail energy

market: an analysis of market share and

concentration (December 2012)

All of these publications were launched on December 3

at CUAC’s Research Insights event, which also

showcased recent research funded through CUAC’s

external research and advocacy program.

Finally, CUAC published three short papers that

supported advocacy on key energy retail market

issues. The papers were:

Fixing up fixed term contracts: what are

consumers saying? (November 2012)

Fixing up fixed term contracts: your questions

answered (November 2012)

Principles for a Voluntary Code of Practice for

price comparison and switching services (July

2012)

All of CUAC’s reports and papers in 2012/13 were

distributed in hard copy to key stakeholders and

promoted via our website, Twitter, and newsletter, with

each receiving between around 200 and 700

downloads from the CUAC website.


External research & advocacy program

Projects approved

In 2012/13, CUAC approved grants for three

research and advocacy projects to a total of

$32,889.80 (including GST). These projects were in

progress at the close of this financial year.

External projects approved 2012/13

Projects completed

In addition, two projects approved for funding in

2011/12 were completed during 2012/13.

La Trobe University’s research report Water Products

and Tariffs: Perceptions, Attitudes and Preferences of

Rural Seniors demonstrated an important link between

water pricing and availability and the health and

wellbeing of older residents of small rural communities.

The Victorian Council of Social Service’s (VCOSS)

Water Advocacy Project enabled VCOSS to sustain

close engagement with water businesses, participate

fully in the Water Price Review 2013—18, and

develop a more robust knowledge base on water

industry and pricing issues, adding value to VCOSS’s

advocacy on utilities and cost-of-living issues.

Recipient Project Amount (inc

GST)

Alternative

Technology

Association

The economics of demand

side water technologies

$12,070.00

Brotherhood of St

Laurence

Improving the targeting of

support for people

experiencing energy-

related hardship

$8,015.80

Consumer Action

Law Centre, with

Victorian Council of

Social Service

Impact of changes to the

Victorian energy

concessions landscape

$12,804.00

La Trobe University’s Dr Susan O’Keefe and VCOSS’

Dean Lombard both presented findings from these

research projects at CUAC’s Research Insights event on

3 December 2012.


Governance

The Directors’ Report (p. 22) details CUAC’s

compliance with its obligations under Corporations

Law. There were, however, some noteworthy

developments in CUAC’s governance in the 2012/13

financial year.

Board

There were changes to the CUAC Board in the

reporting period. Andrew Bell was appointed as a

Director on 23 January 2013, while Director Sandra

Slatter left the Board on 31 October 2012. The CUAC

Chair, Sylvia Davey, resigned on 1 May 2013.

Consumer Affairs Victoria advertised the Chair

position and at the close of the financial year this

recruitment process was still in train.

Corporate governance

On 25 March 2013, the Board adopted a

Capitalisation Policy (3B) and adopted the delegated

Authority and Financial Operations Policy (3A) in draft

form subject to a review post further advice on changes

mooted to CUAC’s accountabilities under the Public

Administration Act. These policies fit within a suite of

policies already adopted by the Board.

The Board has completed a survey evaluation of its

performance, and will review this for further Board

improvements in 2013/14.

Reference Group &

strategic planning

In 2012/13, CUAC finalised a review of its Reference

Group. As a result of this review, the former Domestic

Issues Group and Market Issues Group were

amalgamated into a single Reference Group with a

new Terms of Reference and meeting schedule. In

January, CUAC invited Reference Group membership

applications from a broad range of community

organisations. The 15 applications received were

assessed by a Board sub-committee, and the Board

subsequently approved 14 of the applications.

Reference Group members

In May 2013, the Reference Group met for an Annual

Planning Meeting, with the next major meeting

planned for early in the 2013/14 financial year.


Organisation Representative

Alternative Technology

Association

Damien Moyse, Energy Projects and

Policy Manager

Brotherhood of St Laurence Dr Victoria Johnson, Research &

Policy Manager, Equity in response

to climate change

Consumer Action Law

Centre

Janine Rayner, Senior Policy Officer

– Energy

Community Information

and Support Victoria

Minh Nguyen, Sector Development

Officer

Council on the Ageing Randal Harkin, Member, Victoria

Policy Council

Council of Single Mothers

and their Children, Inc

Jane Stanley, Executive Officer

Country Women’s

Association of Victoria Inc

Marie Vassallo, Social Issues

Chairman

Financial and Consumer

Rights Council

Peter Gartlan, Executive Officer

Good Shepherd Youth and

Family Service

Tanya Corrie, Social Policy

Researcher

National Seniors Australia Neville Daynes, Member Services

Officer, Victorian State Office

Kildonan UnitingCare Joanna Leece, Senior Manager,

Financial Inclusion and Energy

Springvale Community Aid

and Advice Bureau

Rita Battaglin, Pathway and Support

Services Manager

Victorian Council of Social

Service

Dean Lombard, Senior Policy

Advisor

Victorian Farmers

Federation

Darryl Harrison, Policy Manager

Directors’ report

The Directors of the Consumer Utilities Advocacy

Centre Ltd present this report for the financial year

ended 30 June 2013.

Directors

The names of the Directors over the reporting period

are:

Directors have been in office since the start of the

financial year to the date of this report unless otherwise

stated.

No Director has any interest in business contracts or

proposed financial dealings for personal benefit with

the company declared during the financial year ended

30 June 2013.

The company is incorporated as a company limited by

guarantee and therefore does not have share capital.

The CUAC Constitution stipulates the skills and

expertise that Directors bring to the organisation. The

Chair must hold a demonstrated understanding of

regulated industries and consumer advocacy

methodologies, two Directors are appointed on the

basis of their knowledge and expertise in areas related

to the functions of the company, such as economics,

regulatory affairs, consumer affairs or communications

and the remaining two Directors represent key

consumer interests.

Directors’ meetings

During the financial year ended 30 June 2013, 8

meetings of the company’s Directors were held, and 3

were conducted by written circulation, in respect of

which each director of the company attended or

responded in writing to the following:

Company secretary

The name of the person who is a company secretary at

the end of and throughout the financial year is Jo

Benvenuti.

Operating result

The organisation incurred a surplus for the year ended

30 June 2013 of $25,331 (2012 $55,485).

Review of operations

A review of the operations of the company for the year

ended 30 June 2013 is contained in the Report on

CUAC Activities.

Name Role

Ms Sylvia Davey [to 01.05.2013] Chair

Ms Fanoula Ferro, LLB, Grad Dip Int Law [from

09.07.2012]

Deputy

Chair

Ms Sandra Slatter, CM, MIEF, Grad Dip

Entrepreneurship & Innovation, Grad Dip Arts, Civil

Ceremonies [to 31.10.2012]

Director

Ms Ronda Held, B Econ B Social Administration M

Policy & Administration [from 09.07.2012]

Director

Mr Ian Wilson, B Econ (Hons), Dip Public

Administration, MBA

Director

Mr Andrew Bell, B Eng (Hons)/BSc, LLB (Hons),

P.Grad Dip Pub Pol, LLM [from 23.01.2013]

Director

Director Meetings conducted

while a member

Meetings attended

Ms Sylvia Davey 8 7

Ms Fanoula Ferro 9 9

Ms Sandra Slatter 4 2

Ms Ronda Held 9 9

Mr Ian Wilson 11 11

Mr Andrew Bell 5 5


Significant changes in state of

affairs

No significant changes in the state of affairs of the

company occurred during the financial year ended 30

June 2013.

Principal activities

In line with CUAC’s corporate objectives (see inside

front cover), the principal activities of the company in

the course of the financial year were: to operate as an

independent advocate for Victorian electricity, gas and

water consumers, particularly low-income,

disadvantaged and rural consumers; to increase the

capacity of consumers and consumer advocates to

participate in policy and regulatory decisions on

electricity, gas and water through CUAC’s own

resources and its management of the CUAC External

research and advocacy program; undertake research

and commission research into consumer utility issues,

with a particular focus on low-income, disadvantaged

and rural consumers, and to disseminate that

knowledge as widely as possible; and to monitor

consumer utility issues, particularly those affecting low-

income, disadvantaged and rural consumers. There

were no significant changes in these activities during

the financial year.

After balance date events

No matters or circumstances have arisen since the end

of the financial year that have significantly affected or

may significantly affect the operations of the company,

the results of those operations or the state of affairs of

the company in subsequent financial years.

Ms Ronda Held was appointed as Chair effective from

8 August 2013.

Future developments

In the opinion of the Directors there are no likely

developments in the operations of CUAC which would

affect the results of future years, taking into account

that CUAC is funded on an annual basis.

Environmental issues

The company’s operations are not regulated by any

significant environmental regulation under a law of the

Federal or of a State or Territory.

Indemnities and insurance for

Directors and officers

During the financial year, the company paid a

premium in respect of a contract insuring the Directors

of the company (as named above), the company

secretary and all executive officers of the company

against a liability incurred as such a director, secretary

or executive officer to the extent permitted by the

Corporations Act 2001, to the amount of $10 million.

The company has not otherwise, during or since the

financial year, indemnified or agreed to indemnify an

officer or auditor of the company or of any related

body corporate against a liability incurred as such an

officer or auditor.

Proceedings on behalf of

company

No person has applied for leave of Court to bring

proceedings on behalf of the company or intervene in

any proceedings to which the company is a part for

the purpose of taking responsibility on behalf of the

company for all or any part of those proceedings.

Auditor’s declaration

A copy of the auditor’s independence declaration as

required under section 307C of the Corporations Act

2001 is set out on page 24.

Signed in accordance with a resolution of the Board of

Directors.

Ronda Held

Chair

Melbourne, 26 August 2013


Auditor’s independence declaration


Independent auditor’s report to the members of the

Consumer Utilities Advocacy Centre Limited



Directors’ declaration

The directors of the entity declare that:

1. The financial statements and notes, as set out

on pages 26 to 40, are in accordance with

the Corporations Act 2001 and:

a) comply with Australian Accounting

Standards; and

b) give a true and fair view of the financial

position as at 30 June 2013 and of the

performance for the year ended on that

date of the entity.

2. In the directors’ opinion there are reasonable

grounds to believe that the entity will be able

to pay its debts as and when they become due

and payable.

This declaration is made in accordance with a

resolution of the Board of Directors.

Ronda Held

Chair

Melbourne, 26 August 2013


Statement of Comprehensive Income

for the year ended 30 June 2013

Note 2013

$

2012

$

Revenue 2 597,608 608,750

Other income 2 17,933 31,349

Grant programs expense (35,786) (20,675)

Project Expense (30,741) (38,500)

Employee benefits expense (416,338) (413,031)

Depreciation and amortisation expenses (8,754) (13,529)

Rental expense (30,092) (30,007)

Audit and accounting fees (6,033) (10,306)

Insurance expense (11,949) (13,195)

Office expenses (13,496) (11,851)

Other expenses (37,020) (33,520)

Profit before income tax

25,331

55,485

Income tax expense - -

25,331

55,485

Other comprehensive income for the year - -

Total comprehensive income for the year

-

-

Profit attributable to members of the entity 25,331 55,485

Total comprehensive income attributable to members of the entity 25,331

55,485

The accompanying notes form part of these financial statements.


Statement of Financial Position as at 30 June 2013

Note 2013

$

2012

$

ASSETS

CURRENT ASSETS

Cash and cash equivalents 3 678,008 516,247

Trade and other receivables 4 9,324 11,554

TOTAL CURRENT ASSETS 687,332 527,801

NON-CURRENT ASSETS

Plant and equipment 5 31,146 35,095

TOTAL NON-CURRENT ASSETS 31,146 35,095

TOTAL ASSETS 718,478 562,896

LIABILITIES

CURRENT LIABILITIES

Trade and other payables 6 164,165 34,859

Provisions 7 22,554 21,609

TOTAL CURRENT LIABILITIES 186,719 56,468

NON-CURRENT LIABILITIES

Provisions 7 10,753 10,753

TOTAL NON-CURRENT LIABILITIES 10,753 10,753

TOTAL LIABILITIES 197,472 67,221

NET ASSETS 521,006 495,675

EQUITY

Retained Earnings 521,006 495,675

TOTAL EQUITY 521,006 495,675



Statement of Changes in Equity


Note 2013

$

2012

$

Balance at beginning of financial year 495,675 440,190

Profit attributable to members of the entity 25,331 55,485

Total other comprehensive income for the year - -

Balance at end of the financial year

521,006

495,675



Statement of Cash Flows


Note 2013

$

2012

$

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from government funding 705,606 619,171

Payments to suppliers and employees (556,973) (588,232)

Interest received 15,019 27,583

Other Income 2,914 3,766

Net cash provided by (used in) operating activities 9(b) 166,565 62,288

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for plant and equipment (4,805) (2,214)

Net cash used in investing activities (4,805) (2,214)

Net increase/(decrease) in cash held 161,760 60,074

Cash and cash equivalents at beginning of the financial year 516,247

456,173

Cash and cash equivalents at the end of the financial year 9(a) 678,008

516,247



Notes to the Financial Statements


1 Statements of significant accounting policies

The financial report is for Consumer Utilities Advocacy Centre Limited as an individual entity, incorporated and

domiciled in Australia. Consumer Utilities Advocacy Centre Limited is a company limited by guarantee.

Basis of Preparation

The financial report comprises general purpose financial statements that have been prepared in accordance with

Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial

report containing relevant and reliable information about transactions, events and conditions. Material accounting

policies adopted in the preparation of this financial report are presented below and have been consistently applied

unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where

applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Accounting Policies

a) Revenue

Grant Funding provided by the State Government is recognised as income in the reporting period in which CUAC

gains control over the underlying asset. However, for reciprocal grants (i.e. equal value is given back by CUAC to the

provider) CUAC is deemed to have assumed control when CUAC has satisfied its performance obligations under the

terms of the grant. For non-reciprocal grants, CUAC is deemed to have assumed control when the grant is receivable

or received.

Interest revenue is recognised on a proportional basis taking into account the interest rate applicable to the financial

assets.

b) Plant and Equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The depreciable amount of all fixed assets are depreciated on a straight line basis over the asset’s useful life to the

entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of assets are:

Class of Fixed Asset Depreciation Rate

Plant and Equipment 5% - 25%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting

period. Asset classes carrying amount is written down immediately to its recoverable amount if the asset’s carrying

amount is greater than its estimated recoverable amount.


Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses

are included in the statement of comprehensive income.

c) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as

expenses over the lease term.

d) Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to

the instrument. For financial assets, this is equivalent to the date that the company commits itself to either purchase or

sell the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus

transactions costs except where the instrument is classified ‘at fair value through profit or loss’ in which case

transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate

method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between

knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value.

In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

i. the amount at which the financial asset or financial liability is measured at initial recognition;

ii. less principal repayments;

iii. plus or minus the cumulative amortisation of the difference, if any, between the amount initially

recognised and the maturity amount calculated using the effective interest method; and

iv. less any reduction for impairment.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in

an active market and are subsequently measured at amortised cost.

(ii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable

payments, and it is the entity’s intention to hold these investments to maturity. They are subsequently measured at

amortised cost.

(iii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Impairment

At the end of each reporting period, the entity assesses whether there is objective evidence that a financial instrument

has been impaired.


for the year ended 30 June 2013 (Cont’d)


e) Impairment of Assets

At the end of each reporting period, the entity reviews the carrying values of its tangible and intangible assets to

determine whether there is any indication that those assets have been impaired. If such an indication exists, the

recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is

compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is

expensed to the statement of comprehensive income.

f) Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to the

end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at

the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been

measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the

liability, consideration is given to employee wage increases and the probability that the employee may not satisfy

vesting requirements. Those cash outflows are discounted using market yields on national government bonds with

terms to maturity that match the expected timing of cash flows.

Contributions are made by the entity to an employee superannuation fund and are charged as expenses when

incurred.

g) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at-call with banks and other short-term highly liquid

investments with original maturities of three months or less.

h) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is

not recoverable from the Australian Taxation Office. Receivables and payables in the statement of financial position

are shown inclusive of GST.

Funding received from the State Government is not subject to GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing

and financing activities, which are disclosed as operating cash flows.

i) Income Tax

The company is deemed to be an exempt entity by virtue of Division 1AB of the Income Tax Assessment Act 1936.

j) Comparative Figures

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in

presentation for the current financial year.

When an entity applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in

its financial statements, a statement of financial position as at the beginning of the earliest comparative period must be

disclosed.






k) Trade and Other Payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services

received by the company during the reporting period which remain unpaid. The balance is recognised as a current

liability with the amounts normally paid within 30 days of recognition of the liability.

l) Economic Dependence

The continued operation of Consumer Utilities Advocacy Centre Limited is dependent on ongoing funding from the

State Government. At the date of this report, the Board of Directors has no reason to believe the Department will not

continue to support Consumer Utilities Advocacy Centre Limited.

m) New Accounting Standards for Application in Future Periods

The below table shows the relevant new and revised accounting standards (including amending standards) and

interpretations that are mandatory for full years ending 30 June 2013.

These new standards and interpretations have not been applied in the preparation of these financial statements. Other

than changes in disclosure formats, it is not expected that the initial application of these standards and interpretations

in the future will have a material impact in the financial statements.


Standard Effective Date Requirements or amendments

Full Year

Ending

30/06/201

3

AASB 2012-2 1 January

2013

This Standard amends AASB 7 to include disclosures on the effect or

potential effect of netting arrangements on the entity’s financial position.

Optional

AASB 2012-5 1 January

2013

This Standard contains clarifications in the following standards:

AASB 1

AASB 101

AASB 116

AASB 132

AASB 134

Interpretation 2

Optional

AASB 119 1 January

2013

The main changes from AASB 119 as amended in December 2004 focus

on three key areas:

Recognition

- the elimination of the option to defer the recognition of gains and

losses resulting from defined benefit plans (the corridor approach).

Presentation

- the elimination of options for the presentation of gains and losses

relating to those plans.

Disclosure

- the improvement of disclosure requirements that will better show

the characteristics of defined benefit plans and the risks arising from

those plans.

The amendments also incorporate changes to the accounting for termination

benefits.

Optional

AASB 13 1 January

2013

This Standard defines, and contains measurement and disclosure

requirements about, fair value.

Optional



2013

$

2012

$

2 Revenue and other income

Revenue from government grants and other grants:

- DG research project 580,000 565,000

- grant funding received 17,608 43,750

597,608 608,750

Other revenue:

- interest received 15,020 27,583

- other income 2,913 3,766

17,933

31,349

615,541

640,099

3 Cash and cash equivalents

Cash at bank 678,008 516,247

4 Trade and other receivables

Other receivables 9,324 11,554

9,324

11,554




2013

$

2012

$

5 Plant and equipment

Plant and equipment - at cost 137,329 132,524

Less accumulated depreciation (106,183) (97,429)

31,146

35,095

(a) Movements in Carrying Amounts

Movement in the carrying amounts for each class of plant and equipment

between the beginning and the end of the current financial year:

Plant and

Equipment

$

Plant and

Equipment

$

Balance at the beginning of the year 35,095 46,410

Additions at costs 4,805 2,214

Depreciation (8,754) (13,529)

Carrying amount at the end of the year

31,146

35,095

6 Trade and other payables

Grants payable - 2,011

Unearned grants revenue 107,777 -

Creditors and accruals 56,388 32,848

164,165

34,859


Annual Leave

$

Annual Leave

$

Opening balance at 1 July 32,362 29,600

Additional provisions raised during year 22,554 44,623

Amounts used (21,609) (41,861)

Balance at 30 June

33,307

32,362



8 Leasing commitments

Operating Lease Commitments

Non-cancellable operating leases contracted for but not capitalised in the

financial statements:

Payable — minimum lease payments

- not later than 12 months 37,955 16,539

- later than 12 months but not later than 5 years 25,969 52,297

- greater than 5 years -

63,924

68,836

The property lease commitments are non-cancellable operating leases

contracted for but not capitalised in the financial statements with a five-year

term. Increase in lease commitments may occur in line with CPI.

2013

$

2012

$

7 Provisions

Provision for annual leave 22,554 21,609

Provision for long service leave 10,753 10,753

33,307

32,362




2013

$

2012

$

9 Cash flow information

(a) Reconciliation of Cash

Cash at bank 687,008 516,247

(b) Reconciliation of Cashflow from Operations with

Profit after Income Tax

Profit after income tax 25,331 55,485

Non-cash flows:

Depreciation 8,754 13,529

Changes in assets and liabilities:

(Increase)/Decrease in trade and other receivables 2,231 9,929

Increase/(Decrease) in trade and other payables 129,304 (19,417)

Increase/(Decrease) in provisions 946 2,762

Cash flows from operations

166,566

62,288


10 Financial risk management

The company’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term

and long-term investments, and accounts receivable and payable.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the

accounting policies to these financial statements, are as follows:

Note 2013

$

2012

$

Financial Assets

Cash and cash equivalents 3 678,008 516,247

Trade and other receivables 4 9,324 5,873

Total Financial Assets

687,332

522,120

Financial Liabilities

Trade and other payables 6 164,165 34,859

Total Financial Liabilities

164,165

34,859



Financial Risk Management Policies

The Board’s overall risk management strategy seeks to assist the company in meeting its financial targets, whilst

minimising potential adverse effects on financial performance. The Capitalisation Policy and Authority and Financial

Operations Policy are reviewed by the Board on a regular basis. These include credit risk policies and future cash flow

Specific Financial Risk Exposures and Management

The main risks the company is exposed to through its financial instruments are credit risk, liquidity risk and market risk

relating to interest rate risk and equity price risk.

(a) Credit risks

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract

obligations that could lead to a financial loss for the company. The company does not have any material credit risk exposure as its major source of revenue is the receipt of government

grants.

(b) Liquidity risks

Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or otherwise

meeting its obligations in relation to financial liabilities. The company manages this risk through monitoring forecasts

cashflows as required.




(c) Markets risks

i. Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting

period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial

instruments. The company is also exposed to earnings volatility on floating rate instruments.

ii. Price risk

The company is not exposed to any material commodity price risk.

Sensitivity Analysis

The following table illustrates sensitivities to the company’s exposures to changes in interest rates. The table indicates

the impact on how profit and equity values reported at the end of the reporting period would have been affected by

changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities

assume that the movement in a particular variable is independent of other variables.

Profit

$

Equity

$

Year ended 30 June 2013

+/-2% in interest rates 13,560 13,560

Year ended 30 June 2012

+/-2% in interest rates 10,325 10,325

No sensitivity analysis has been performed on foreign exchange risk as the company is not exposed to foreign

currency fluctuations.

Net Fair Values

The carrying amount of financial assets and financial liabilities approximate fair value and are presented in the

statement of financial position.




11 Related party transactions

Transactions between related parties are on normal commercial terms and conditions no more favourable than those

available to other persons unless otherwise stated.

12 Events after the reporting period

There have been no events subsequent to balance date which require disclosure in the financial statements.

15 Company information

The registered office and principal place of business of the Company is:

Consumer Utilities Advocacy Centre Limited

Level 2 172 Flinders Street

MELBOURNE VIC 3000

16 Members’ guarantee

The entity is incorporated under the Corporations Act 2001 and is an entity limited by guarantee. If the entity is wound

up, the constitution states that each member is required to contribute a maximum of $10 each towards meeting any

outstanding and obligations of the entity. At 30 June 2013 the number of members was 1 member (2012: 1).


13 Key management personnel compensation

Short-term

Benefits

Post- employment

Benefits

Other Long-term

Benefits

Total

$ $ $ $

2013

Total compensation 161,920 13,812 - 175,732

2012

Total compensation 157,174 13,928 - 171,102

14 Segment reporting

The company operates predominantly in one business and geographic segment, being the advocacy of utility services in

Victoria.

Documents

CONSUMER UTILITIES ADVOCACY CENTRE LTD ANNUAL REPORT … · CUAC ANNUAL REPORT 2012/13 -2-Executive Officer’s report Driving energy prices down by getting good policy settings in