On 15 September 2022, the Australian Energy Market Commission (AEMC) introduced new regulatory protections for customers impacted by family violence. These rules allow family violence customers to focus on other important matters and provide peace of mind that they will receive clear, transparent, and honest support from their energy retailers.
The rule change request was submitted by Red Energy and Lumo Energy on 23 September 2021. The AEMC received 21 submissions to its consultation paper and 19 submissions to its draft determination published on 18 November 2021 and 16 June 2022, respectively. On 15 February, 80 people attended the AEMC industry forum to discuss the rule change and examine family violence reform.
Intimate partner violence contributes to death, disability, homelessness, and illness in adult women more than any other preventable risk factor. In 2017, the Australian Bureau of Statistics found that one in four Australian women experienced violence by a current or previous intimate partner. Because they are critical to everyday life, essential services like electricity, gas, water, and communications can be exploited by perpetrators of family violence to control victims, perpetuate psychological abuse, affect their financial security, and potentially cause injury or death.
New Rule – Summary of key changes
- Retailers must have a family violence policy that is published on their website and the retailer must ensure that it is implemented, maintained, and complied with. This policy takes precedence over their market retail contract obligations.
- Retailer’s employees, including those engaged through a third-party provider must understand the nature and consequences of family violence and are capable of appropriately identifying, engaging, and effectively assisting family violence customers.
- Retailers must provide a secure method so family violence customers can be identified easily and therefore minimise the need for a customer to repeatedly disclose their experiences.
- Retailers must, during all of their engagements with the customer including by a third-party provider acting on behalf of the retailer, have regard for the safety of a family violence-affected customer by having a deep consideration for the customer’s personal circumstances.
- Retailers must have processes and systems in place that would easily enable them to identify family violence as a likely cause of payment difficulties and hardship.
- Retailers must have processes, systems and training in place to ensure that customer’s circumstances are taken into account before referring their debt to an external provider or attempting to recover any outstanding amount. This includes the ability to identify if a debt or arrears outstanding is jointly or severally owned.
- Retailers including third-party providers acting on behalf of the retailer must not disclose confidential information about an affected customer to another person without prior consent of the customer impacted by family violence.
- Retailers must have systems and processes in place to identify and use a method of communicating with customers that is safe and secure. Upon identification of an agreed communication method, this method takes precedence over all other communication requirements in the retail rules.
- Retailers must not require family violence customers to provide documentary evidence as a prerequisite for receiving family violence protections.
- Retailers must have processes and systems in place (including on their website) to refer customers to one or more external family violence support services, at a time and in a manner that is safe, respectful, and appropriate for affected customers’ circumstances.
Family Violence protections for Small Business Customers
The AEMC has decided that the final rule obligations apply to small business customers in the same way as they would apply to residential customers. According to the AEMC, extending these family violence protections to small business customers is an effective way to protect victim-survivors from harm that may be caused due to energy services. The AEMC considers that excluding small business customers from these protections would create substantial uncertainty and leave a critical gap in protections for family violence. The AEMC in their final determination also reminded retailers that the rule to extend family violence protections to small business customers is the same as the rule that is currently in place for Victorian family violence customers, and evidence suggests other retailers who are operating in Victoria already have processes to manage compliance with family violence obligations for small business customers.
AEMC’s Recommendation to extend protections to Embedded Network Customers
The AEMC recommended that the Australian Energy Regulator (AER) consider extending these protections to customers within an embedded network, and subsequently, the AER committed to launching a Consumer Vulnerability Strategy in October 2022. This includes actions to prioritize a review of the exempt selling guideline to consider if these protections should apply to embedded networks. The AER has indicated that they would work closely with consumer groups and retailers in implementing the new family violence obligations, including by providing clarity on how to comply with these new obligations. The AER stated that they will strongly monitor retail compliance in this space, and where non-compliance is identified, the AER is willing to enforce the rules.
Australian Energy Regulator’s position on this rule change (AER)
The AER has welcomed this new rule change by the AEMC. The AER believes that many organisations have a role in both supporting victim-survivors and ensuring the energy regulatory framework and business practices do not cause harm to impacted customers. The proposed Consumer Vulnerability Strategy regarding embedded networks (mentioned above) will consider the AEMC’s recommendation in the Final Determination.
Similarities and Differences to the Victorian Family Violence protections
The AEMC’s final determination provides a summary table (pages 37 to 40) of the similarities and differences between obligations implemented in Victoria and those implemented in states that have adopted the National Energy Customer Framework (NECF). We have listed below some of the key differences identified by the AEMC in their final determination between the Victorian protections and the NECF protections:
- retailers having regard for the safety of an affected customer,
- factors that retailers must consider before recovering arrears or selling the debt to a third party,
- considering family violence as a likely cause for a customer experiencing hardship or payment difficulties,
- prohibiting retailers from requesting documentary evidence as a precondition for receiving family violence protections
Civil Penalty Recommendation
The AEMC along with the AER has recommended certain family violence provisions be classified as civil penalty provisions to ensure retailers comply with these obligations. These provisions include:
- Retailers to develop, implement and comply with a family violence policy (rule 76A),
- Retailers to have regard for customer safety (rule 76D), and
- No disclosure of affected customer information (rule 76G).
Each of the above provisions has been recommended as a Tier 1 civil penalty provision, and the AEMC approach is clear in their final determination. The key AEMC reasoning in recommending civil penalties for these provisions is to address the risk of significant customer harm, and this aligns with other Tier 1 penalty provisions such as for Hardship and Life Support.
The new rules to protect family violence-impacted customers come into effect on 1 May 2023. We recommend retailers ensure that they have appropriate systems and processes in place to ensure compliance with these new family violence protections. Furthermore, retailers must ensure that their family violence policy is published on their website and is easily accessible along with other important information.
If energy businesses need support in performing an assurance review of their systems and processes to ensure compliance with these new obligations, please contact Compliance Quarter here.