AEMC to crack down on retailer’s late fees

The Australian Energy Market Commission (AMEC) has obliged the request made by the Federal Government in February to crack down on late payment fees by the release of a consultation paper on a proposed rule to tackle these excessive penalties.

Retailers can offer large discounts off a customer’s bill, but these discounts are often only provided if the customer meets certain conditions, such as paying their bill on time or by direct debit. The amount charged when a consumer misses the bill due date can result in a high penalty which can significantly hurt the hip pocket.

This practice impacts a large number of Australians, with the Australian Competition and Consumer Commission finding, on average, one in four customers did not meet the conditions of their discount. This was even higher for customers in financial hardship, with around 60 per cent missing out on these discounts.

The rule proposed by the Government would limit the conditional discount only to the retailer’s reasonable costs. Retailers would also be prevented from penalising customers twice, with both a late payment fee and withdrawal of a pay-on-time discount.

This proposed rule change builds on action already taken to protect customers and reduce power prices for families and small businesses, including:

  • Implementing the Default Market Offer  – or price cap – which places a limit on what retailers can charge their electricity standing offer customers
  • Introducing a reference price mechanism, which ensures consumers are able to compare electricity offers against a standard benchmark price
  • Ensuring vulnerable customers who are experiencing financial hardship get the help they need to pay their power bills

The Government’s Big Stick legislation to prohibit energy market misconduct is also an important reform that aims to end customer rip offs, hold the big energy companies to account, and drive competition in the market and lower prices for consumers.

The AEMC is seeking responses to the consultation paper by 19 September 2019, with the view to finalising a rule change determination by the end of February 2020.

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