Disclosure obligations of energy retailers

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Today we take a fresh look at the disclosure obligations of energy retailers before or as soon as practicable after they contract with a customer (a market retail contract). Complete and accurate disclosure is important to make sure that consumers can make well-informed decisions. This means that consumers should have all the information they need to decide if the product is right for them based on their own needs.

A retailer’s obligations vary depending on the jurisdictions in which it operates. The National Energy Retail Rules, Retail Pricing Information Guidelines, and the ACCC’s Electricity Retail Code all impose disclosure obligations on retailers marketing in NSW, QLD, SA, and the ACT. In Victoria, obligations are found within the Energy Retail Code of Practice.

Rule 64 of the National Energy Retail Rules

Rule 64 sets out the information that must be disclosed by a retail marketer to a small customer (before the formation of a market retail contract or as soon as practicable after the formation of the contract). We last looked at rule 64 here.

Required information includes (paraphrased):

– All applicable prices, charges, and benefits to the customer (to the extent that they are not otherwise part of prices), early termination payments and penalties, security deposits, service levels, concessions or rebates, billing and payment arrangements, and how any of these matters may be changed (including, where relevant, when changes to prices will be notified by the retailer to the customer);

– If the small customer operates, or proposes to operate, a small generator, any conditions applicable to supply from the small generator into the distribution system and how these may be changed (including, where applicable, when this will result in a change in prices, charges, or customer benefits);

– The start date and length of the contract, the possibility of extensions, and the ending of the contract if the customer moves out during the term of the contract;

– If any requirement is to be complied with by an electronic transaction, the transaction must be specified in detail, and, as appropriate, the customer must be informed that they will be bound by the electronic transaction or will be recognised as having received the information contained in the electronic transaction.

– The customer has the right to cancel the contract during the cooling-off period, as well as instructions on how to do so.

– The customer has the right to complain to the retailer about any energy marketing activity conducted by the retail marketer on behalf of the retailer. If the complaint is not resolved to the customer’s satisfaction, they have the right to complain to the energy ombudsman.

RequirementStatus
Prices, Charges, and Benefits
Early Termination Payments, Penalties, Security Deposits Service Levels, Concessions, Rebates, Billing, Payment Arrangements
Small Generator Supply Conditions
Contract Start Date, Length, Extensions, Ending
Electronic Transaction Specifications
Cooling-Off Period Cancellation Instructions
Right to Complain Retailer and Energy Ombudsman

ACCC’s Electricity Retail Code

The Electricity Retail Code came into effect on 1 July 2019, and any discussion about disclosure would be incomplete without a reference to the Code. We examined some of the requirements of the Code here.

The Code applies to all retailers that supply electricity to households and small usage businesses in New South Wales, South Australia, and south-east Queensland. The purpose of the Code is to allow consumers to compare “apples with apples” when it comes to pricing.

The Code applies in relation to communication of prices or discounts including where a retailer is:

– advertising or publishing offered prices;

– offering to supply electricity at offered prices; and

– giving a customer written notice of a change to the retailer’s offered prices.

Victoria’s Energy Retail Code of Practice

In Victoria disclosure obligations centre around the principle of ‘clear advice.’ Customers are entitled to clear, timely and reliable information, provided in a respectful manner, and a mechanism to consider and compare the features and prices of different energy plans.

Pursuant to clause 38, a retailer must communicate the following information to a small customer before obtaining that customer’s explicit informed consent:

(a) any terms pursuant to which the amounts payable by the small customer may vary depending on the actions of the small customer (for example, any conditional discounts);

(b) any terms pursuant to which the amounts payable by the small customer may vary depending on the actions of the retailer (for example, any terms pursuant to which the retailer may make price changes, or any specific price changes that will apply to that customer retail contract);

(c) any terms pursuant to which a benefit change may occur;

(d) the retailer’s other generally available plans or a Victorian default offer or standing offer available to the small customer, which the retailer reasonably believes may be more suitable for the small customer having regard to any information the retailer has regarding the small customer wherever it is practicable to do so; and

(e) if switching to the customer retail contract involves moving the small customer to a new tariff structure, the cost impact that the new tariff structure may have for the small customer. 

RequirementStatus
Any terms pursuant to which the amounts payable by the small customer may vary depending on the actions of the small customer
Any terms pursuant to which the amounts payable by the small customer may vary depending on the actions of the retailer
Any terms pursuant to which a benefit change may occur
The retailers other generally available plans or a Victorian default offer or standing offer available to the small customer
Cost impact that the new tariff structure may have for the small customer

If requested by a small customer, the retailer must provide the small customer with information about the availability of the Victorian default offer or standing offer and how the small customer may access the Victorian default offer or standing offer.

The reference to “any information the retailer has” is a reference to any relevant information the small customer provides during the communication including in response to any relevant enquiries by the retailer, or any other information the retailer has about the small customer and which the retailer considers relevant in providing the advice. Effectively, there is a positive duty on a retailer to consider first what information it ‘has’ and second to determine if, based on that information, there is a better plan for that customer.

Additional disclosure obligations are found in clauses 45 to 47 of the Code. The following information must be provided to a customer before the formation of a contract or as soon as practicable after the formation of the contract:

(a)     all applicable prices, charges, early termination payments and penalties, security deposits, service levels, concessions or rebates, billing and payment arrangements and how any of these matters may be changed;

(b)     the commencement date and duration of the contract, the availability of extensions, and the termination of the contract if the small customer moves out during the term of the contract;

(c)     if any requirement is to be or may be complied with by an electronic transaction—how the transaction is to operate and, as appropriate, an indication that the small customer will be bound by the electronic transaction or will be recognised as having received the information contained in the electronic transaction;

(d)     the rights that a small customer has to withdraw from the contract during the cooling off period, including how to exercise those rights;

(e)     the small customer’s right to complain to the retailer in respect of any energy marketing activity of the retail marketer conducted on behalf of the retailer and, if the complaint is not satisfactorily resolved by the retailer, of the small customer’s right to complain to the energy ombudsman; and

(f)      whether an associate of a retailer will receive any commission or fee paid by a retailer by reason of the small customer entering into the customer retail contract.

The above information must be given in a single written disclosure statement accompanied by a copy of the market retail contract. Notably a customer must give explicit informed consent to be provided with documents electronically, per clause 10. Therefore a retailer must obtain that explicit informed consent first if it wishes to provide the disclosure materially electronically.

Recommendations

To ensure compliance, energy retailers should ensure that they provide clear and accurate information to customers at the time of entering into a contract in a manner that is consistent with the relevant regulatory obligations. The details matter, so ensure that you consult the relevant regulatory instruments directly.

To do so, retailers should:

  1. Familiarise themselves with the relevant regulatory instruments that apply to energy retailers.
  2. Develop a clear and accurate information policy and process documents for advertising and disclosure that are consistent with the regulatory obligations.
  3. Ensure that the information policy and process documents are communicated to all relevant staff and contractors.
  4. Monitor the information policy and process documents to ensure that they are being followed.

If you would like assitance in the development of these documents, please get in touch.

Further disclosure obligations

In NSW, additional disclosure obligations of energy retailers are found within the Fair Trading Act- you can read more about those here.  There are also separate disclosure obligations for retailers selling within embedded networks under the network exemption guidelines. You can read more about them here. Finally, separate disclosure obligations apply in relation to standard retail contracts and you can read more about those here.

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