2022-2023 Compliance and Enforcement Priorities of the AER

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The Australian Energy Regulator (AER) has published its 2022-2023 Compliance and Enforcement Priorities. The AER will continue to focus its compliance and enforcement activities on how retailers assist customers who are facing financial difficulties and those who are within embedded networks.

Customers who are facing financial difficulties

The AER’s focus on vulnerable consumers is understandable with market conditions expected to result in higher energy costs for consumers who are already facing higher costs of living.

The AER notes that:

We continue to closely monitor data on consumers facing financial difficulties, including debt levels, the number of consumers on payment plans and hardship programs, and the successful completion of those plans and programs.

We remain concerned by the average debt per customer upon entry into hardship programs, and the number of customers being disconnected, which may suggest that customers are not being identified as hardship customers early enough. There is a continuing requirement to ensure residential customers in financial difficulty
are given the full suite of protections in the Retail Law and Retail Rules, including protections in retailers’ own hardship policies, and that these protections are offered to both existing and former customers. Retailers must offer and apply payment plans to customers requiring payment assistance.

In a recent update webinar, the AER noted:

  1. the importance of assessing a customer’s capacity to pay when establishing a payment plan;
  2. the importance of early identification and assistance for customer’s experiencing financial difficulty; and
  3. the need to ensure that customer discussions are empathetic and not simply based on approved scripts.

Earlier this week the AER announced very significant penalties paid by Origin Energy and related entities with respect to customer hardship obligations and once the relevant judgment has been published we will be providing further updates and insights to our clients.

Lesson: All energy sellers should carefully re-examine their customer hardship policies, training, and processes to ensure that they align to the relevant regulatory requirements.

Embedded network customers

Embedded networks remain an area of focus for the AER. The AER notes that:

In 2022/23 the AER is expanding the priority to improve outcomes for more consumers in embedded networks by including those being sold energy by authorised retailers. Stakeholders continue to tell us about the inherent vulnerability of embedded network consumers. This is due to the difficulty these consumers face accessing competition, regardless of whether they are sold energy by an authorised retailer or exempt seller. Customers in embedded networks may face higher prices and lesser protections in relation to continuity of supply and life support equipment.

Lesson: it is notable that the AER specifically mentions authorised retailers in relation to embedded networks. Authorised retailers who sell energy within embedded networks should carefully examine their policies, processes, systems and training to ensure compliance with all applicable regulatory obligations.

Other priorities

The AER will also be focusing on generator’s compliance with offers, dispatch instructions, obligations in relation to bidding behaviour and the provision of accurate and timely information to AEMO.

The AER notes that:

The requirement for generators to ensure compliance with NER obligations relating to offers and their ability to comply with AEMO dispatch instructions and obligations regarding bidding behaviour is critical to power system security and efficient outcomes in wholesale energy markets, particularly where the conduct contributes to market event

The AER will also focus on the gas market including ensuing that service providers meet information disclosure obligations under Part 23 of the National Gas Rules and on timely and accurate gas auction reporting and demand forecasting in downstream wholesale gas markets by registered participants.

If you would like to discuss your compliance program please get in touch.

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