New electricity and gas consumption benchmarks apply from March 2018

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We recently discussed changes to the way in which retail pricing information is communicated to retail customers (see https://compliancequarter.com.au/new-format-communicating-retail-pricing-information-energy-customers/). Another recent change that retailers will need to come to terms with are the new electricity and gas consumption benchmarks. Retailers will be required to update their customer billing to include electricity consumption benchmarks for bills issued from 30 March 2018 onwards.

In today’s piece, we explain how the benchmarks are to be used by retailers. For further information see the Australian Energy Regulator’s (AER) Guidance on energy consumption benchmarks on residential customers’ bills (https://www.aer.gov.au/system/files/Bill%20benchmark%20guidance%202018_0.pdf).

electricity and gas consumption benchmarks
Photo by Maxime Le Conte des Floris on Unsplash
  1. The purpose of electricity and gas consumption benchmarks

Electricity and gas consumption benchmarks let customers compare their own household energy use with the average use by other households in their geographical area. This may highlight to the customer whether they are paying the right amount for their energy. The benchmarks must be updated every three years, and in December 2017 a new set of benchmarks became available, developed in accordance with National Energy Retail Rules (NERR), 169(3). For the first time, gas consumption benchmarks are available as well as electricity consumption benchmarks.

A smart spreadsheet containing the new benchmark information and accompanying user guide can be found here (https://www.aer.gov.au/retail-markets/retail-guidelines-reviews/electricity-and-gas-bill-benchmarks-for-residential-customers-2017/decision).

  1. General display requirements

In determining which electricity consumption benchmarks to include in customer bills, the retailer must be guided by the general requirement in the NERR that the electricity consumption benchmark information for a customers localised zone be presented in a way that is easy to understand (NERR, 170(3)). This means that, mediated by Guidance provided by AER, the retailer can choose which information it considers will be relevant to the customer.

Unsurprisingly, a key determinant of electricity consumption is household size. Benchmark data for five categories of household have been gathered, ranging from one to five inhabitants. AER recommends four or five categories are included in the customer’s bill (Guidance, p5).

Retailers should also consider the use of tailored electricity benchmark data based on the customer’s possession of a pool, gas or electric underfloor heating. The relevance of this data depends on the customer’s climate zone.

  1. Seasonal benchmarks

AER recommends that retailers use seasonal benchmark information, as again, this is an important determinant of energy use. In doing so, retailers should use the date for the benchmark corresponding to the date on which the meter was read (Guidance, 6)

  1. Daily and Total Bill Benchmarks

Retailers can tailor the benchmark information that they provide to include the daily seasonal benchmark or the total benchmark for the period.

In deciding which to use, a retailer might consider how often the customer is billed. If billed very regularly, it may be that the daily benchmark is most appropriate than the total (Guidance, p7).

  1. Gas benchmarks

AER encourages retailers to display gas benchmarks on customer bills (Guidance, p8). As with electricity consumption, retailers providing gas benchmarks should consider household size information and seasonal benchmarks. They should also consider the tailored benchmarks for households with gas heating (as gas heating significantly affects gas consumption).

  1. Statement of purpose and reference

Under NERR rule, 170(1) retailers must also include a statement of purpose and a reference to the Energy Made Easy website in their billing information to a customer. The statement of purpose should set out what the information shows and why it has been included in the customer’s bill

  1. Graphical or pictorial format

Rule 170(2) of the NERR requires that the benchmarks information be presented in a graphical or tabular format on the customer bill. Retailers providing gas benchmarks should do the same. The Guidance provides some examples of appropriate graphical formats, such as bar graphs comparing the customer’s consumption with benchmarks for the different household sizes (Guidance, pp12-13).

Contact us if you have any questions on the above.

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