Retailer Obligations: End of Fixed Term Benefit

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When an energy retailer offers a fixed-term benefit it must follow a prescribed process prior to the expiry of that period to ensure that its customers are not taken by surprise by the end of the benefit period.

What is a fixed benefit?

A fixed benefit is a benefit or advantageous picture of a product that expires after a specific period of time. Examples given by the AER include the following:

  •  15% guaranteed discount off usage charges for 12 months. At the end of 12 months, the customer’s discount will change to a 10% guaranteed discount.
  • 15% off usage charges for 12 months, if a customer pays on time. At the end of 12 months, the customer will no longer receive a pay on time discount.
  • 15% guaranteed discount off usage charges for six months. At the end of six months, the customer’s discount will change to a 20% guaranteed discount.
  • A customer receives two movie tickets every month for six months. At the end of six months, the customer will no longer receive any movie tickets.

The rules

The National Energy Retail Rules (Retail Rules) require a retailer to notify small electricity and gas customers when a benefit provided to the customer for a minimum or fixed period in their market retail contract is ending or changing.

The notification that must be sent must be sent no earlier than 40 business days and no later than 20 business days before the benefit change date.

The notice

Requirements for the contents of the notification referred to above are specified in rule 48A of the Retail Rules and in the AER Benefit Change Notice Guidelines (AER Guidelines). The notice must be sent in writing- using clear, simple and widely understood language consistent with the AER Guidelines- and include the following information:

  • the small customer’s metering identifier;
  • that a benefit change will occur and the benefit change date;
  • that the small customer may use the price comparator to compare offers that are generally available to classes of small customers in their area;
  • the name and web address of the price comparator;
  • that the customer can request historical billing data and, if they are being sold electricity, energy consumption data, from the retailer that will assist it to use the price comparator to compare offers that are generally available to classes of small customers in their area; and
  • any early termination charges payable under the contract.

The notice must contain any additional information specified in the AER Guidelines. Not all of the requirements within the AER Guidelines are set out below and retailers should ensure that they read the guideline in full. An example of a complaint benefit change notices is provided in Appendix A of the AER Guidelines.

The AER Guidelines state that a retailer cannot direct its customers to its website for the information required, i.e. it must all be contained within the notice itself.

The AER Guidelines specify that the notice must be sent to the customer in accordance with the customers preferred method of receiving written communication from the retailer. For example, if a customer has opted to receive communications from the retailer by email, the notice must be sent to the customer by email.

The headline

Retailers must include a prominent headline statement on the benefit change notice in a manner that ensures that it is clearly identifiable as a headline.

If the benefit change will result in a decrease in the value of the benefit, the headline statement must inform the customer that the benefit change will result in a loss of a benefit and must refer the customer to Energy Made Easy. If the benefit change will not result in a decrease in the value of the benefit, a retailer has discretion over the content of the headline statement, subject to the requirement in clause 56 of the AER Guidelines.

If a retailer refers to the benefit in the headline statement, a retailer must describe the benefit in the same way as it is described in the retailer’s marketing material.

A retailer must ensure the headline statement is prominent and clear and use either colour, font size or other visual tools to ensure this information is easily distinguishable from other information in the benefit change notice

The ‘do nothing amount’

A retailer must include the amount is estimated to be payable by the customer over the next 12 months under the MRC as a result of the benefit change. This is referred to as the ‘do nothing amount’ in the AER Guidelines
The ‘do nothing amount’ must be expressed as a figure in dollar terms inclusive of GST and calculated in accordance with section 5.3.1 of the AER Guidelines.

The ‘do nothing’ amount must be positioned before the information in Zone A of the benefit change notice.

Instructions to customer

A retailer must include the steps that a customer can take to compare plans on Energy Made Easy. The steps must be positioned before the information in Zone A of the benefit change notice.

Pursuant to s 74:
Retailers must ensure that the steps include: (a) a reference to Energy Made Easy (b) a statement that the customer can use Energy Made Easy to compare plans (c) a statement that directs the customer to refer to the information in Zone A.

Zone A

Zone A refers to a specific area within the benefit change status as set out in appendix A to the AER Guidelines. The contents of zone A i.e. information that must be required is set out in section 4.1 of the AER Guidelines in the form of the table.

Retailers are only required to provide information relevant to the characteristics of the customer’s existing market retail contract a fuel type and tariff type. There are no fixed dimensions for the zone A information.
Reference to EME

The AER Guidelines also state that the benefit notice must include the Energy Made Easy URL in the following format http://www.energymadeeasy.gov.au/offer-search. Further, if the notice is sent electronically, any references to the Energy Made Easy must hyperlink to the above URL.