AER: The Final Statement of Expectations

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On 24 March 2021, the Australian Energy Regulator (AER) announced that it had extended its COVID-19 energy protections for a limited time. The AER’s original Statement of Expectations was introduced at the start of the pandemic in March 2020. The Statement of Expectations has been updated a total of four times and applies to households and small businesses in Queensland, New South Wales, Australian Capital Territory, South Australia, and Tasmania.

The Statement of Expectations sets out the expectations that the AER has with respect to how energy businesses deal with small business and residential customers who are potentially impacted by the coronavirus pandemic. The expectations include that all residential and small business customers who indicate that they may be in financial stress, be offered a payment plan or a hardship arrangement. Such arrangement may include agreeing to a period in which no payment will be made and retailers are expected to work with customers who may be in financial stress to make any payment plans or hardship arrangements sustainable by taking into account a customer’s capacity to pay, ensuring that a customer is on the tariff most likely to minimize their energy costs, and by considering other actions that can be taken to minimize a customer’s debt such as the recalculation of debt obligations using a lower cost energy plan.

The Statement of Expectations explains that retailers are expected to not disconnect any residential or small business customer before 30 June 2021, where that residential customer may be in financial stress and that residential customer is either in contact with the retailer or is accessing any retailer support or any small business customer who continues to adhere to a payment plan or other agreed payment arrangement. Furthermore, retailers are requested to not disconnect any body corporate or large business customer who is on-selling energy to residential or small business customers who may be in financial stress before 30 June 2021. The second and third paragraphs of the Statement of Expectations do not outright prohibit the disconnection of customers, however, retailers would need to ensure that they follow all of their obligations in the national energy retail rules and law and that they not disconnect any customer who fulfils either of the conditions set out in paragraph 2.a.

Where a customer has not made or responded to any contact and has subsequently been disconnected for non-engagement, the AER expects that a retailer will process an order for reconnection immediately on contact from the customer and that the retailer waive disconnection, reconnection, and contract break fees.

Paragraph five of the Statement of Expectation indicates that the AER expects the retailers defer any referrals to debt collection agencies for the recovery of amounts overdue or for credit default listing until 30 June 2021 for residential customers or former residential customers who may be in financial stress who are either in contact with the retailer in relation to the debt or are accessing any retailer support or for small business customers who continue to adhere to a payment plan.

The AER expects that retailers modify existing payment plans if a customer’s circumstances change and where such a modification is necessary. Network providers and retailers are expected to waive disconnection, reconnection, and/or contract break fees for small businesses that have ceased operation along with daily supply charges to retailers, during any period of disconnection until 30 June 2021.

In paragraph eight, the AER notes that retailers must prioritize the safety of customers who require life support equipment and continue to meet their obligations.

In paragraph nine, the AER expects that retailers prioritize clear, up to date communications with customers about the issues addressed in the Statement of Expectations, including by updating their website, social media, and call center waiting and hold messages. This expectation is particularly with respect to the availability of retail and other supports such as payment plans, energy efficiency advice, and fault repair. Finally, in paragraph 10 the AER expects energy businesses to minimize the frequency and duration of planned outages for critical works and to provide as much notice as possible to assist households and businesses in managing any outage.

As of 1 March 2021, the AER notes that there has been a 10% increase in the number of residential customers in debt since 30 March 2020 and a 22% increase in small business customers in debt over the same period of time. The total electricity debt as of 1 March 2021 for residential customers is $149 million and is $43 million for small business customers. The average amount of debt as of 1 March 2021 is $1,151 for residential customers and $2,660 for small business customers.

For more information, please refer to the AER’s website.

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