Adequate Assistance for Customers in Financial Hardship

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On 23 January 2023, the Essential Services Commission (ESC) announced that Alinta Energy Retail Sales Pty Ltd (Alinta Energy) had paid more than $380,000 in penalties after allegedly breaching energy rules that protect Victorian consumers by failing to provide adequate assistance to customers in financial hardship.

Commenting on the relevant regulatory framework, ESC Chairperson,  Kate Symons said: “Energy is an essential service and businesses delivering energy must follow the rules. There is no excuse for failing to provide the help consumers are legally entitled to, especially those who may be experiencing vulnerability.” And, further: ““Placing unnecessary barriers and prolonging the time it takes for customers to receive assistance can heighten the hardship being experienced, and that’s something the commission won’t tolerate. All of these customers were actively engaging with Alinta Energy, and many had explained why they needed assistance.”

When customers are facing financial hardship, it is important for retailers to provide adequate assistance to help them avoid getting into arrears. This assistance should include both standard assistance, tailored assistance and additional assistance beyond the minimum standards set out in the Energy Retail Code of Practice. This article will provide an overview of the assistance that retailers should provide to Victorian customers in financial hardship.

Retailers have an obligation to provide both standard and tailored assistance to their residential customers. Standard assistance is a set of minimum requirements that retailers must provide to their customers, while tailored assistance is more flexible and can be adapted to the individual needs of the customer.

Standard Assistance

Standard assistance is a set of minimum requirements that retailers must provide to their residential customers. This includes providing information about the customer’s entitlements, the retailer’s standard complaints and dispute resolution procedure, and the forms of standard assistance that the retailer must make available to help customers avoid getting into arrears.

The Essential Services Commission’s Energy Retail Code of Practice outlines the minimum standards that retailers must meet when providing standard assistance.

Standard assistance made available must include at least three of the following:
(a) making payments of an equal amount over a specified period;
(b) options for making payments at different intervals;
(c) extending by a specified period the pay-by date for a bill for at least one billing cycle in any 12 month period;
(d) paying for energy use in advance

Retailers must also take steps to ensure that residential customers are aware of the standard assistance available to them. This includes providing information about the forms of standard assistance that the retailer has elected to make available, and allowing customers at least 6 business days to consider the information given, request further information, and put forward a payment proposal (clause 129).

Tailored Assistance

Tailored assistance is more flexible and can be adapted to the individual needs of the customer.

The Energy Retail Code of Practice sets out what type of tailored assistance must be provided in specific circumstances. Tailored assistance includes:

  • repayment of arrears over not more than two years by payments at regular intervals of up to one month;
  • advice from the retailer about payment options that would enable a residential customer to repay their arrears over not more than two years;
  • specific advice about the likely cost of a residential customer’s future energy use and how this cost may be lowered;
  • specific advice about any government and non-government assistance (including Utility Relief Grants and energy concessions) available to help a residential customer meet their energy costs;
  • practical assistance to help a customer that may be eligible for a Utility Relief Grant;
  • Practical assistance to help a residential customer lower their energy costs including, but not limited to:
    • The tariff that is most likely to minimise the residential customer’s energy costs, based on the retailer’s knowledge of the residential customer’s pattern of energy use and payment history;
    • Practical assistance to help the residential customer reduce their use of energy, based on the residential customer’s pattern of energy use and on the circumstances of where the residential customer lives, provided there is scope for action to be taken for that purpose; and
    • Information about how the residential customer is progressing towards lowering their energy costs given at sufficient intervals for the residential customer to be able to adequately assess that progress;
  • An initial period of at least six months during which:
    • Repayment of the residential customer’s arrears is put on hold;
    • The residential customer pays less than the full cost of their on-going energy use while working to lower that cost; and
  • Any other assistance consistent with the objective of the Division.

Retailers are encouraged to provide assistance beyond the minimum standards set out in the Energy Retail Code of Practice.

Communication

It is important for retailers to communicate information about their payment assistance policies to their customers. Retailers should ensure that information about their financial hardship policies is readily available to residential customers. They should also send a copy of their financial hardship policy to any residential customer who requests it.

Recommendations

In order to provide adequate assistance to customers in financial hardship, retailers should:

  1. Provide customers with the forms of standard and tailored assistance listed in the Energy Retail Code of Practice.
  2. Offer additional assistance beyond the minimum standards;
  3. Communicate information about their payment assistance policies to their customers.
  4. Ensure that information about their financial hardship policies is readily available to residential customers.
  5. Send a copy of their financial hardship policy to any residential customer who requests it.
  6. Ensuring that staff are trained on the detailed requirements;
  7. Ensuring that systems and processes are consistent with the Energy Retail Code of Practice obligations.
  8. Contact us to complete an assurance review.

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