How to Build an Effective Energy Retailer Compliance Program

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It is very difficult for energy retailers who are operating independently of one another to understand what an effective compliance management program is. Typically, the only feedback that they receive is from regulators when something goes wrong i.e. when there is a breach that they are required to report on, and they subsequently go through an investigation and enforcement process. Regulators themselves do not fully understand the compliance function’s roles and responsibilities- they typically see the tail end, what goes wrong, and not the work that goes in to avoiding non-compliance.

Compliance Quarter has the advantage of having worked with a number of energy retailers and as a result is in a unique position in being able to explain what an effective compliance program looks like. So, what are some of the practical steps that each retailer should ensure they are taking to ensure compliance?

The Board needs to be Onboard.

Central to an effective compliance program is the position of senior management and the leadership team within the business. All too often we see energy retailers who are unwilling to appropriately resource their compliance function with the unfortunate consequence that they end up paying significant penalties when things, inevitably, go awry. Often, this stems from an attitude held by the senior leadership team that compliance is a requirement that they would rather not review or appropriately think about. A lack of diversity in boards is one of the reasons why this attitude is pervasive.

If you are in charge of an energy retailer, have you considered whether the ship you are enthusiastically directing is in good shape?

The central question for every board is whether an investment of money towards an appropriate compliance function is worthwhile considering that such investment will result in a better reputation with regulatory bodies, customers, and the community and will reduce the likelihood of non-compliance and significant financial penalties. In almost all instances, an investment in compliance is one of the best investments that an energy retailer can make.

Understand and Respond to Regulatory Changes

One of the key challenges for energy retailers is to keep up with the frequent and often complex changes in the regulatory landscape. These changes can have significant impacts on the retailer’s operations, processes, systems, contracts, and customers. Therefore, it is essential that the retailer has a mechanism to identify, assess, and respond to new and amended regulatory obligations in a timely and accurate manner. This can include:

  • Establishing a dedicated regulatory team or function that monitors and analyses the relevant sources of regulatory information, such as legislation, regulations, codes, guidelines, decisions, and consultations.
  • Developing a regulatory change management process that defines the roles and responsibilities, timelines, and steps for assessing the impact, implementing the changes, and communicating the outcomes of the regulatory changes.
  • Creating a regulatory register or database that records and tracks the retailer’s current and future obligations, as well as the actions taken to comply with them.
  • Engaging with the regulators, industry bodies, and stakeholders to provide feedback, seek clarification, and influence the regulatory outcomes.

Conduct Compliance Assurance Reviews

Another important aspect of a compliance program is to ensure that the retailer is actually complying with its obligations and that the compliance controls and processes are working effectively. This can be achieved by conducting regular and systematic compliance assurance reviews that evaluate the retailer’s compliance performance, identify any gaps or risks, and recommend corrective actions or improvements. The compliance assurance process should include:

  • Developing a compliance assurance plan and calendar that outlines the areas that will be subject to an assurance review, the frequency and scope of the reviews, and the methodology and criteria for the reviews.
  • Ensuring that the reviews cover all areas of the retailer’s business and external suppliers that are involved in the compliance activities, such as sales, marketing, customer service, billing, metering, network, and IT.
  • Using a combination of assurance methods, such as self-assessments, audits, inspections, testing, and reporting, to collect and analyse the evidence of compliance.
  • Documenting and reporting the findings, issues, and recommendations of the reviews, and following up on the implementation and closure of the actions. Potential non-compliances will need to be reported in accordance with the relevant regulatory reporting guidelines.

Provide Compliance Training

Compliance is not only a matter of policies and procedures, but also of people and culture. Therefore, it is vital that the retailer provides comprehensive and ongoing compliance training to its internal employees and external suppliers, to ensure that they understand their compliance obligations and expectations, and that they have the skills and knowledge to perform their compliance tasks. The compliance training program should include:

  • Identifying the compliance training needs and objectives for each role and function, and designing the training content and delivery methods accordingly.
  • Providing different types of training, such as induction, refresher, update, and specific training, to cater for the different levels of compliance awareness and competence.
  • Using various training formats, such as online, face-to-face, webinars, workshops, and coaching, to suit the different learning styles and preferences.
  • Evaluating the effectiveness and outcomes of the training, and seeking feedback and suggestions for improvement.

Ensure Compliance and Performance Reporting

Compliance reporting is not only a regulatory requirement, but also a management tool, as it can provide valuable insights into the retailer’s compliance status, performance, and trends. Compliance reporting can help the retailer to monitor and measure its compliance activities, identify and manage any compliance issues or risks, and demonstrate its compliance achievements and improvements. There are compliance and performance reports that must be prepared and submitted to regulatory bodies, retailers should go beyond this. The compliance reporting process should include:

  • Establishing a compliance and performance reporting framework and schedule that defines the types, frequency, and recipients of the compliance reports, as well as the data sources, indicators, and formats of the reports.
  • Ensuring that the compliance and performance reports are accurate, complete, timely, and consistent, and that they comply with the regulatory and internal reporting requirements and standards.
  • Analysing and interpreting the compliance data and information, and highlighting any compliance trends, patterns, anomalies, or deviations.
  • Using the compliance reports to inform and support the decision-making, planning, and improvement of the compliance program.

Facilitate Compliance and Operations Collaboration

Compliance is a shared responsibility and a cross-functional activity. Therefore, it is crucial that a retailer facilitates and fosters a close and constructive collaboration between the compliance and operations teams, to ensure that the compliance program is aligned with and supports the business objectives and operations. The compliance and operations collaboration should include:

  • Having regular meetings and communication channels between the compliance and operations teams, to exchange information, feedback, and ideas, and to resolve any issues or conflicts.
  • Inviting and involving the operations teams in the compliance planning, implementation, and review processes, to ensure that the compliance activities are relevant, practical, and effective.
  • Encouraging and empowering the operations teams to take ownership and accountability for their compliance tasks, and to report and escalate any compliance concerns or incidents.
  • Recognising and rewarding the compliance achievements and contributions of the operations teams, and promoting a positive and proactive compliance culture.

Use a Compliance Management System

Managing compliance can be a complex and challenging task, especially for large and diverse energy retailers. Therefore, it is advisable that the retailer uses a compliance management system, such as the Compliance HUB (developed by Compliance Quarter), to centralise and streamline the compliance work and documentation. A compliance management system can help the retailer to:

  • Store and organise the compliance policies, procedures, records, and reports in a secure and accessible platform.
  • Automate and simplify the compliance tasks, such as regulatory change tracking, compliance assurance scheduling, compliance reporting generation, and compliance action management.
  • Monitor and track the compliance status, performance, and issues, and generate alerts and notifications for any compliance events or deadlines.
  • Integrate and communicate with other systems and platforms, such as the retailer’s CRM, ERP, and BI systems, to facilitate data sharing and analysis.


Compliance is a key aspect of energy retailing, and it requires a systematic and proactive approach to ensure that the retailer meets its regulatory obligations and business goals. By following the best practices outlined in this article, the retailer can build an effective compliance program that can enhance its compliance performance, reputation, and efficiency. If you need any assistance or advice on how to design, implement, or improve your compliance program, please contact us at Compliance Quarter. We are a team of experts and specialists in energy retail compliance, and we can help you to achieve your compliance objectives and outcomes.

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