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…
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New Rule from AEMC Allows Retailers to Defer Network Bills

New Rule from AEMC Allows Retailers to Defer Network Bills

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The Australian Energy Market Commission  (‘AEMC’) has just finalised a rule that will allow the majority of market energy retailers in Australia to defer network bills for 6 months. Here we explain this decision and what it means for retailers. The Problem for Retailers COVID-19, and the regulatory responses to it, has had a significant impact on energy retailers.  The usual collections processes used by electricity retailers have changed as those retailers have sought to act in a manner that is consistent with the AER's 10 Principles. One consequence of this, is that customer debt to retailers is increasing significantly. This has, in turn put cashflow pressure on retailers. AEMC’s Solution : Deferral of Network Bills Network charges are the amounts that retailers need to pay to their local distributors…
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FCA proceedings commenced by the ACCC against Sumo

FCA proceedings commenced by the ACCC against Sumo

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The Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court of Australia alleging that Sumo Power Pty Ltd (Sumo) made false or misleading representations to Victorian consumers in relation to its electricity plans.The ACCC alleges that between June and November 2018, Sumo promoted 12-months electricity plans with large discounts including pay on time discounts of up to 43% while planning to substantially increase the charges applied to those customers within a few months, or knowing it was likely to do so.The ACCC claims that sumo caps that represented to consumers that it would maintain, or not materially increase those low rates and consumers would get the benefit of the pay on time discounts for a 12-month period. In November 2018, Sumo substantially increased the underlying rates…
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LPE Pays Penalties for alleged contraventions of the Electricity Code

LPE Pays Penalties for alleged contraventions of the Electricity Code

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The Australian Competition and Consumer Commission (ACCC) has announced that electricity provider Locality Planning Energy Pty Ltd (LPE) has paid a penalty of $10,500 after it was issued with an infringement notice for an alleged contravention of the Electricity Retail Code. This represents the first enforcement action taken by the ACCC for an alleged breach of the Electricity Retail Code. The Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (the Code) applies to all electricity retailers that supply to small customers in the applicable distribution regions of New South Wales, South Australia and south-east Queensland. You can read more about the Code on Law Quarter's website here.  The Code sets a cap on standing offer prices and specifies how prices and discounts must be advertised, published or offered. The Code was…
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The Essential Services Commission of Victoria 2020-2021 Compliance and Enforcement Objectives

The Essential Services Commission of Victoria 2020-2021 Compliance and Enforcement Objectives

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The Essential Services Commission of Victoria (ESC) has released its Compliance and Enforcement Objectives for 2020 to 2021. We examine those objectives below.All Eastern States, other than Victoria, have adopted the National Energy Customer Framework and are regulated by the Australian Energy Regulator.  You can view our article on the AER's compliance and enforcement objectives here.The 2020-2021 PrioritiesThe ESC notes that the objectives represent priorities for compliance but do not reduce the need for retailers to ensure compliance with all regulatory obligations. The 2020 to 2021 objectives are to ensure:customers experiencing vulnerability are protected from disconnection and accumulating debt;customers affected by family violence are treated with respect and not subject to actions within the control of energy businesses that may endanger them;energy businesses are deterred from disconnecting customers when they…
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AER releases 2020-21 compliance and enforcement priorities

AER releases 2020-21 compliance and enforcement priorities

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Key priorities for the Australian Energy Regulator On 6 August 2020 the Australian Energy Regulator (AER) released its compliance and enforcement priorities for 2020 to 2021. The AER notes that its priority statement should be read alongside the current Statement of Expectations of energy businesses which set out the 10 principles the AER expects energy retailers to adhere to during the COVID crisis.Generally, the AER has noted that it will maintain the 2019 to 2020 priorities with changes in recognition of the current COVID crises.The first priority for the AER is customers in financial difficulty and ensuring that those customers are offered sustainable and affordable payment plans and timely access to retailer hardship programs. We have written extensively about the identification of customers who are potentially experiencing financial difficulties in…
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Reform of the Australian Energy Regulator Civil Penalty Regime

Reform of the Australian Energy Regulator Civil Penalty Regime

AU Energy Compliance
Tougher penalties The Statutes Amendment (National Energy Laws) (Penalties and Enforcement) Bill 2020 is currently before the SA Parliament. The Bill will amend the  National Electricity Law, National Gas Law and National Energy Retail Law (National Energy Laws) and introduce tougher penalties for non-compliance by energy businesses. The amendments bring the National Electricity penalty regime all into conformity with the penalty regime under Australian Consumer Law. There are three tiers of penalties that can be applied. The first tier attracting penalties of ~$10 million, the second attracting penalties of  ~$1.45 million, and the third of ~$145,000. The tests that are applied focus on consumer detriment, market impact, market participant behaviour, the security and reliability of supply, and the administration of the market. Examples of Type 1 Consumer Harm is conduct resulting in: a risk to…
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Australian Energy Regulator’s Statement of Expectations

Australian Energy Regulator’s Statement of Expectations

AU Energy Compliance
On 27 March 2020, the Australian Energy Regulator (AER) released a 'Statement of Expectations' which sets out ten principles they expect businesses to adhere to during this time, to the maximum extent possible. While the statement is not legally binding, it is obviously in energy retailer's bests interests to comply with the statement. In our view, it is likely that the Government will codify obligations in due course. Below, we look at each of the ten principles in turn.PRINCIPLES 1.Offer all residential and small business customers who indicate they may be in financial stress a payment plan or hardship arrangement, regardless of whether the customer meets the ‘usual’ criteria for that assistance.2. Do not disconnect any residential or small business customers who may be in financial stress, without their agreement,…
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Alinta Energy Pays Penalties

Alinta Energy Pays Penalties

AU Energy Compliance
Energy retailer Alinta Energy has paid numerous penalty notices to the Essential Services Commission (ESC) for alleged breaches of Explicit Informed Consent obligations. A retailer is prohibited from requesting the transfer of a customer without EIC. The alleged breach was that Alinta Energy's agents failed to obtain EIC for customers who were then switched to Alinta Energy. According to reports in a newspaper the agents used false accents to pretend to be the customers in question. This penalty highlights the importance of retailers having robust processes in place to prevent EIC breaches and fraud by agents. Even a verification call can be thwarted by a clever sales agent. As discussed elsewhere, retailers should pay careful attention to the incentive structures they use for sales. If a group of people are incentivised to…
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