As a result of industry feedback, we are introducing some interim policy changes to provide you with more flexibility to meet your security obligations.
Over time, retail service providers have increasingly told us that it can be challenging to meet the security obligations under our existing contracts (including for fibre services). In addition, the issue of security requirements has been raised as a pain point for consideration as part of the scope in the context of the 2022 CSA transition process.
We’ve considered this feedback and thought some more about the purpose of the security obligations (i.e. to appropriately manage Chorus’ credit risk). As a result, we’ve developed an internal policy change to address some of these issues as follows:
- The first $100k doesn’t count toward security payable - we’re introducing a threshold of $100,000, with only amounts over that threshold being used to calculate the security payable. If we’ve billed you less than $100,000 during the relevant two-month billing period, no security will need to be provided.
- Expanding acceptable financial metrics to show security is not required - we’re introducing financial metrics in addition to credit ratings. On application by an RSP, we’ll consider these other metrics when deciding whether security is required. These additional financial metrics indicate an RSP is of a similarly low credit risk for Chorus as an RSP with an acceptable credit rating.
You'll find more details about these changes in the resource section.
We’ve described this as an interim policy change. We’ve done that because we want to test how it works over a 12-month period, with a review of its application and of any RSP's feedback near the end of 2021. The aim is to finalise a BAU policy change by the first quarter of calendar year 2022.
We are working through the impact of the security threshold on individual RSPs. Your Account Team will be in touch with you in due course to manage any respective changes to your requirements.
Please contact your Account Manager in the first instance should you have any questions.
From the Chorus Finance Team