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Energy retailers' customer hardship policies

Under the Retail Law, each authorised retailer must develop, maintain and implement a customer hardship policy for their residential customers. The purpose of a retailer’s customer hardship policy is prescribed in the Retail Law—to identify customers experiencing payment difficulties due to hardship and to assist those customers to better manage their energy bills on an ongoing basis.

AER approval of retailers' customer hardship policies

One of the AER's roles is to approve retailers' customer hardship policies. In order for a retailer’s customer hardship policy to be approved, the AER must be satisfied that the policy contains the following minimum requirements, as specified in the Retail Law:

  • processes to identify customers experiencing payment difficulties due to hardship, including identification by the retailer and self-identification by a residential customer
  • processes for the early response by the retailer in the case of residential customers identified as experiencing payment difficulties due to hardship
  • flexible payment options (including a payment plan and Centrepay) for the payment of energy bills by hardship customers
  • processes to identify appropriate government concession programs and appropriate financial counselling services and to notify hardship customers of those programs and services
  • an outline of a range of programs that the retailer may use to assist hardship customers
  • processes to review the appropriateness of a hardship customer’s market retail contract in accordance with the purpose of the customer hardship policy 
  • processes or programs to assist customers with strategies to improve their energy efficiency, where such processes or programs are required by a local instrument
  • any variations specified or of a kind specified by the AER, and
  • any other matters required by the Retail Rules.

The AER must also be satisfied that the retailer’s customer hardship policy will, or is likely to, contribute to the achievement of the purpose of a customer hardship policy.

Further, the Retail Law requires the AER, when considering whether to approve a retailer’s customer hardship policy (or variation), to have regard to the following principles:

  • that the supply of energy is an essential service for residential customers
  • that retailers should assist hardship customers by means of programs and strategies to avoid disconnection solely due to an inability to pay energy bills
  • that disconnection of premises of a hardship customer due to inability to pay energy bills should be a last resort option, and
  • that residential customers should have equitable access to customer hardship policies, and that those policies should be transparent and applied consistently.

Guidance on AER approval of customer hardship policies

In May 2011, the AER published Guidance for retailers on the information they could include in their customer hardship policy to ensure their policies fully satisfy the requirements in the Retail Law and Rules.

The Guidance provides information on the process retailers should follow when submitting customer hardship policies (or variations to policies) to the AER for approval. It outlines the general approach the AER will take to review, assess and approve customer hardship policies. It also provides guidance to retailers on the kind of factors and information the AER will consider, having regard to the principles set out in the Retail Law, when reviewing customer hardship policies for approval.

Retailers' customer hardship policies

Under the Retail Law, energy retailers must publish their customer hardship policies on their websites. Many retailers also choose to publish a shorter, more accessible ‘consumer friendly’ document that summarises the key features of their hardship policies.  These policies have applied to customers in Tasmania and the Australian Capital Territory since 1 July 2012 and to customers in South Australia since 1 February 2013. On 1 July 2013, the policies will apply to customers in New South Wales.

In addition to providing information about their hardship policies on customer energy bills and through customer service centres, the AER has encouraged retailers to promote their hardship policies to organisations such as community and welfare organisations. By taking steps to promote and publicise these hardship policies and make them accessible to all customers, retailers are ensuring their policies are transparent, equitable and consistently applied.

Ongoing monitoring of retailers' customer hardship policies

In addition to approving hardship policies, the AER will have an ongoing role in monitoring the performance of these retailers and their customer hardship policies and ensuring compliance with the legal requirements. As part of this, the AER will publish an annual report each year commenting on how retailers handle customers experiencing payment difficulties and their performance in respect of the AER's hardship program indicators. For more information, see the AER's retail market performance reporting guideline and performance reporting section of the website.