Are you paying lip service to your customer hardship obligations?

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Under the National Energy Retail Law (see sections 43-51) and associated Rules (see rules 31 and 71-73), energy retailers have a range of obligations which exist to protect customers facing financial difficulties. This means, among other things, that customers following agreed repayment plans or participating in hardship programs cannot be disconnected.

customer hardship obligations

By Dr Drew Donnelly, Compliance Quarter.

Last year, AER’s 2016-17 Annual Report on Compliance & Performance of the Retail Energy Market and 2017 Hardship Review revealed some problematic trends in relation to customers facing hardship, including:

  1. Increased debt levels for customers;
  2. Low numbers of customers receiving hardship assistance;
  3. Fewer customers completing hardship programs;
  4. Increased overall electricity disconnections.

In response to these concerns, the Australian Energy Regulator (AER) has just submitted a rule change request to the Australian Energy Market Commission (AEMC).[1]Today we look at the proposed rule change and what this could mean for retailers.

The Rule Change Proposal

The proposed rule change would empower the AER to create a ‘Hardship Guideline’. This would sit alongside the other Guidelines (such as the Retail Authorisation Guideline and the Compliance Procedures and Guidelines) in setting out the obligations of retailers in operational detail. AER proposes a Hardship Guideline specifically in response to:

  1. Customers have not been receiving sufficient assistance with managing their energy service.[2] Last year, through the Hardship Review, AER noted that there is no consistent method used by retailers for identifying customers in need of hardship assistance. While some retailers have sophisticated processes such as predictive modelling, others rely on customers missing a certain number of scheduled bill payments before they are referred to a hardship program. Overall, policies are too general and do not commit the retailer to act in a certain way;
  2. Customers are unclear about their rights and entitlements.[3] AER has observed from its review that often hardship policies do not contain reference to specific statements as to how a retailer will act or respond, or what assistance a customer is entitled to by law;
  3. Through compliance audits, AER found that it was difficult to determine how and whether retailers were meeting their hardship obligations under the Retail Law and Rules.[4] Many retailers simply had no idea how they were applying their own policy.

Through developing a Hardship Guideline AER would seek to create a single reference for customer hardship obligations. It would create more consistency across hardship policies and the assistance that is provided to customers. It is also envisaged that a Hardship Guideline would make it easier for AER to monitor and enforce the hardship obligations.

The process from here

AEMC is likely to initiate this rule change request. Once it has done so it will release a consultation paper to receive public submissions on the proposed rule change.

Note, if the rule change is completed it will still be up to AER to develop the content of the Hardship Guideline. It will only do so after consultation.

In the meantime, if you would like any assistance in ensuring compliance with your existing customer hardship obligations and developing hardship policies, please get in contact with us.

[1] AEMC is the public body responsible for consulting on and making changes to energy rules. See https://www.aemc.gov.au/rule-changes/strengthening-protections-customers-hardship.

[2] See AER’s Request for rule change – strengthening protections in the National Energy Retail Rules for customers in financial hardship, p10.

[3] Ibid., p11.

[4] Ibid., p9.

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