The Australian Energy Market Commission (AEMC) has launched a set of new consumer protections aimed at supporting more households to access better energy deals.
The new rules respond to requests submitted by energy ministers in August 2024 and will restrict energy retailers from raising prices more than once per year, remove unfair fees for vulnerable customers and ensure hardship customers benefit from their retailer’s cheapest available deals if they cannot switch.
AEMC Chair, Anna Collyer, described the changes as a significant milestone in consumer protection.
The Commission said the reforms also mark the first time it has formally applied equity considerations to protect Australia’s most vulnerable energy users.
Ms Collyer said the reforms will help ensure that Australian households can have greater confidence in their energy plans and that those experiencing financial difficulty receive appropriate support.
“For the first time, we have formally applied our updated equity guidance across these rule changes, explicitly considering how contract terms, benefits and fees may disproportionately impact vulnerable consumers.”
Final determinations on protections
Improving consumer confidence in retail energy plans
The final determination aims to address systemic issues affecting consumers’ trust in the energy market. The final rule will:
- Protect customers from paying higher prices for their loyalty by ensuring they pay no more than the standing offer price if their energy plan’s benefits change or expire
- Remove unreasonably high penalties for not paying bills on time
- Restrict retailers from increasing prices in market retail contracts more than once every 12 months
- Prohibit retail fees for vulnerable consumers and limit fees and charges to reasonable costs for all other consumers.
“By limiting retail energy price increases to once per year, which for most customers will fall in July to align with regular industry updates, we’re ensuring Australian households can better predict their energy costs and avoid unexpected price rises throughout the year,” Ms Collyer said.
The new rules on improving consumer confidence in retail energy plans will take effect on 1 July 2026, giving retailers just over 12 months to implement them.
Assisting hardship customers
The AEMC said the final determination recognises that hardship customers face unique barriers when engaging with the energy market, including a lack of time, stress from ongoing financial pressure, or literacy and language barriers.
The final rule places a stronger onus on retailers to assist hardship customers with better offers while giving retailers flexibility in delivering these protections. It ensures hardship customers are financially no worse off than if they were on their retailer’s lowest cost deemed better offer.
The AEMC said it has designed these protections to work within existing legal frameworks while preserving customer choice. The Commission notes that broader reviews of customer experience frameworks are being examined by energy ministers.
“Our final rule acknowledges these challenges and shifts more responsibility to retailers to ensure these customers receive appropriate support,” Ms Collyer said.
The new rules on assisting hardship customers will come into effect from 30 December 2026. The longer timeframe allows the Australian Energy Regulator (AER) to update its guidelines before retailers implement the new protections.
Draft determination targets switching barriers
Improving the ability to switch to a better offer
Following extensive consultation, the AEMC’s draft determination proposes a targeted solution to increase awareness of potential energy savings by improving visibility of the ‘better offer message’ that already appears on energy bills.
Research shows as many as 40 per cent of customers do not always open their bills, missing important messages about potential savings. The draft rule would require retailers to present better offer messages in cover emails and bill summaries.
Ms Collyer said research cited by the AER showed that seeing the better offer message is effective in engaging customers.
“When we initiated this rule change process in February, we initially explored whether streamlined switching processes would benefit consumers.
“However, stakeholders indicated that the switching process is easy and generally only takes a few minutes. This is in comparison to finding and evaluating which plan is best for the customer, which can be challenging.
“The primary opportunity is visibility – ensuring customers know when better deals are available to them,” Ms Collyer said.
Ms Collyer encouraged customers not to wait.
“If you haven’t checked your energy bill lately, take a few minutes to look for the better offer message. It could save you hundreds of dollars a year, and switching typically only takes a few minutes,” she said.
Submissions on the draft determination for improving the ability to switch to a better offer are due by 31 July 2025.
The AEMC said it will publish its final determination in September 2025 following further consultation.
Equity at the heart of decision-making
The AEMC said it has applied its updated decision-making guidance, which incorporates equity considerations, to each of the rule change requests,
“Our equity guidance recognises that energy equity exists where all consumers can fairly access and benefit from the energy system,” Ms Collyer said.
“In practice, this means addressing structural barriers that prevent consumers from accessing benefits and ensuring our decisions don’t create or exacerbate vulnerability.
“For example, we found that retail fees disproportionately affect vulnerable consumers who may struggle to engage with the market, and therefore we are prohibiting these fees for those customers.”
Background
The rule change package responds to findings from the Australian Competition and Consumer Commission (ACCC) that customers who do not regularly engage in the retail energy market often pay higher prices, particularly those on legacy plans with large conditional discounts or expired benefit periods.
The Commission said the AER’s foundational work on better bills and payment difficulty has also informed its approach to the new consumer-focused reforms.
The work forms part of a seven-rule change package submitted by Energy Ministers, with the remaining determinations on improving the application of concessions to bills and the final determination on improving the ability to switch to a better offer due for completion later in 2025.
