The Australian Energy Regulator (AER) has put protecting energy consumers at the centre of its recently launched five compliance and enforcement priorities for 2021-22.
AER Chair, Clare Savage, said the AER will be monitoring retailers to ensure they identify residential consumers in financial difficulty, and offer appropriate payment plans to those consumers who need payment assistance as one of the key priorities.
“There is an ongoing requirement on retailers to ensure consumers in financial difficulty are given the full suite of protections in the Retail Law and Retail Rules including protections in retailers’ own hardship policies,” Ms Savage said.
“The Retail Law and Rules require retailers to implement their hardship policies, which set out how they identify consumers experiencing financial hardship or payment difficulty and the steps retailers will take to support these consumers.
“The Retail Law and Rules also require retailers to offer and apply payment plans to consumers requiring payment assistance.
“Throughout the COVID-19 pandemic the AER has monitored consumer debt levels, as well as the number of consumers that are in retailer hardship policies or have payment plans.
“It is concerning to see that while debt levels have increased, the number of consumers with payment plans or accessing retailer hardship programs has not.”
Ms Savage said the Retail Law and Rules also provide that when applying payment plans, retailers must have regard to a consumer’s capacity to pay where relevant.
“It is important to consider a consumer’s capacity to pay when making a payment plan with them to ensure they are not set up to fail,” Ms Savage said.
“Payment plans are critical to assisting consumers in financial difficulty to manage their debt and unfortunately there have been reports where retailers may have been setting up payment plans for consumers without taking into account their capacity to pay, which is of significant concern to us.”
In 2020, a retailer was ordered by consent to pay $1.5 million in penalties after the Federal Court found that it wrongfully disconnected eight customers experiencing financial difficulty, failed to maintain its hardship policy and failed to provide customers the opportunity to enter into appropriate payment plans. The retailer also wrongfully disconnected eight customers in financial hardship.
Two subsidiaries of another retailer paid $100,000 in infringement notice penalties after allegedly wrongfully disconnecting customers experiencing payment difficulties without first offering the customers two payment plans as required.
The AER’s priorities will also focus on consumers living in embedded networks such as retirement villages, caravan parks and some apartment buildings to make sure they can access dispute resolution services through Ombudsman schemes.
“This priority includes ensuring exempt sellers and operators of embedded networks comply with the conditions of their exemption, including obtaining Ombudsman scheme membership in jurisdictions where they are required to do so,” Ms Savage said.
“A large number of stakeholders, including Ombudsman schemes and consumer groups, identified this as a key area for attention during our priority setting engagement activities, and having this as a priority will help ensure the effective operation of private electricity networks and ensure consumers are protected.”
The AER’s key compliance and enforcement priorities for 2021-22 are:
- Effective identification of residential consumers in financial difficulty and offer of payment plans that have regard to the consumer’s capacity to pay
- Ensure embedded network compliance with exemption conditions, including consumer access to Ombudsman schemes
- Focusing on registered generators’ compliance with AEMO dispatch instructions and their ability to comply with their latest offers at all times
- Ensure service providers meet information disclosure obligations and other part 23 National Gas Rules obligations
- Ensure timely and accurate gas auction reporting by registered participants
In developing the priorities, the AER took into account a range of information including compliance intelligence from AER activities and insights from AEMO, state and territory energy departments, energy Ombudsman offices and consumer groups.
In addition to these five priority areas, we will continue to act where there are serious issues impacting vulnerable consumers, including life support consumers, or to help shape new or emerging markets, as well as progressing previously identified priority areas.
The AER has new oral examination powers and courts may order substantially increased penalties for breaches of the National Energy Laws with maximum penalties for certain provisions now the greater of $10 million, three times the benefit obtained from the breach, or ten per cent of annual turnover.
Find out more on the AER’s Compliance and Enforcement Priorities 2021-22 here.