Consumer matters
Issue date
AER reference
NR 14/23

Energy retailer CovaU Pty Ltd (CovaU) has paid a $67,800 infringement notice issued by the Australian Energy Regulator (AER), after the company allegedly failed to present the prices for its standing offers (also known as standard contracts) on its website for 19 months.

The standing offer is a safety net that protects consumers who are not on market contracts, making sure they don’t pay unjustifiably high prices for energy services. The maximum a retailer can charge customers on standing offers is capped by the Default Market Offer, which is set by the AER every year.

Consumers may be on a standing offer if their market offer has expired, they’ve never taken up a market offer, they’ve moved into a new property or asked to be placed on one.

The AER alleges, by not presenting its standing offer prices on its website in breach of section 23(1) of the National Energy Retail Law (Retail Law), CovaU undermined its customers’ ability to access all of the offers available to them, and ensure they are on the best offer for their circumstances.

AER Board Member Mr Justin Oliver reinforced the importance of standing offers to protect consumers from unjustifiably high prices and reminded retailers that standing offer failings can have real impacts on their customers.

“Many Australians are already struggling with cost-of-living pressures. Not being presented with all available energy plans limits their choice and means they may be paying more than they need to,” said Mr Oliver.

“All energy retailers, big or small, have an obligation and responsibility to comply with the standing offer requirements in the National Energy Retail Law.

“We also strongly encourage consumers to visit the Energy Made Easy website at www.energymadeeasy.gov.au to compare energy plans and find the best deals to suit their individual circumstances.”

In addition to payment of the infringement notice, the AER has accepted a court enforceable undertaking for CovaU to appoint a third-party compliance expert to identify improvements to CovaU’s Retail Law and Rules compliance systems, and for a separate independent expert to complete a post-implementation review of the effectiveness of those improvements. The court enforceable undertaking includes an admission by CovaU that it breached its obligations under the Retail Law.

The AER can issue an infringement notice where it has reasonable grounds to believe a person or business has contravened certain provisions of the Retail Law.

Note to Editors

Recent ACCC enforcement action

This enforcement outcome coincides with a separate investigation of CovaU by the Australian Competition and Consumer Commission (ACCC) in relation to alleged contraventions of the Electricity Retail Code.

Default Market Offer

The Default Market Offer or DMO is a maximum price that retailers can charge electricity customers on default contracts known as standing offer contracts. The AER’s role is to determine the DMO price each year.

The DMO applies to small business and residential customers in areas where there is no other retail price regulation: South Australia, New South Wales and south-east Queensland. The DMO price for each area also acts as a ‘reference price’ for residential and small business offers in that area.

When advertising or promoting offer pricing, retailers must show the price of their offer in comparison to the DMO/reference price. This helps customers more simply compare the price of different offers.