Strengthening protections for customers in financial hardship

Vulnerable energy customers experiencing financial difficulties are the focus of a series of new protective measures announced by the Australian Energy Regulator (AER) today.

“Energy affordability is a significant issue for many Australian households. Customers are entitled to assistance from a retailer if they are having trouble with their energy bills and we are working to ensure they are receiving that,” said AER Chair Paula Conboy.

Building on the findings of its 2017 Hardship Policy Review, the AER has submitted a rule change request to the Australian Energy Market Commission (AEMC) that would develop a binding Customer Hardship Policy Guideline as a single point of reference for industry on how the hardship obligations should be applied, and provide customers with a clear understanding of their rights and entitlements.

“Our Hardship Review showed a wide variation in practices across retailers and a disconnect between retailers’ policies and practical assistance offered to customers,” Ms Conboy said.  

The AER is also auditing the hardship processes of selected retailers and is investigating potential breaches of hardship and disconnection requirements.

Businesses must have systems and processes to monitor their obligations. Audits of hardship processes will assess the adequacy of these systems in ensuring these important obligations are met.

Ms Conboy said the Retail Law provides protections for customers experiencing financial difficulties, including requirements that disconnection for non-payment only occurs as a last resort. Customers adhering to agreed repayment plans or participating in hardship programs cannot be disconnected.

“Rising electricity disconnections, fewer customers successfully completing hardship programs and high debt levels for customers not in these programs are all strong indicators that there is more work to be done to ensure customers get the required assistance,” Ms Conboy said.

The AER will focus on hardship protections in 2018 and will continue to monitor retailers’ compliance with these obligations and take action where they are not being met.

Background

The Retail Law and Retail Rules (which apply in New South Wales, the Australian Capital Territory, Tasmania, Queensland and South Australia) set out key protections and obligations for energy customers and the retail and distribution businesses they buy their energy from. The AER monitors and enforces compliance with the Retail Law and the Retail Rules.

Under the National Energy Retail Law, a retailer must maintain and implement a customer hardship policy for its residential customers. Hardship programs typically contain a range of support measures for customers experiencing payment difficulties, and retailers are prohibited from disconnecting a hardship customer for non-payment if they are adhering to a payment plan.

At minimum, a retailer’s hardship policy must include:

  • processes to identify customers experiencing payment difficulties due to hardship;
  • processes for early response by the retailer;
  • offering of flexible payment options (including payment plans and Centrepay);
  • processes to identify appropriate concessions and financial counselling services;
  • process to review customers’ market retail contracts; and
  • programs to assist customers in improving their energy efficiency.

The AER has a role in approving retailers’ customer hardship policies.

In November 2017, the AER took action against Origin Energy for allegedly wrongfully de-energising the premises of a vulnerable customer after failing to offer him hardship assistance. Origin Energy paid penalties of $40,000.

Under Section 273 of the Retail Law, businesses must establish policies, systems and procedures to enable it to efficiently and effectively monitor its compliance with the requirements of the Retail Law and Retail Rules. The AER may exercise its powers to carry out or require compliance audits to assess an entity's compliance with this requirement.

About the AER

The Australian Energy Regulator (AER) works to make all Australian energy consumers better off, now and in the future. 

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland. We do not set the prices consumers pay.

We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.

Issued date: 
27 March 2018
AER reference: 
NR 08/18
Contact: 
AER Media 0466 409 921 media@aer.gov.au