Energy retailers in Victoria have specific obligations under the Energy Retail Code of Practice to provide clear information to customers about their ‘best offer’ – that is, the plan that would minimize the customer‘s energy costs based on their usage history.
The objective is to ensure small customers can easily understand whether they are on the retailer‘s best plan for them and how to access the retailer‘s best offer if not. One of the significant challenges in the energy sector (as in banking and elsewhere) is that customers who sign up to offers do not necessarily shop around and end up paying more than they could pay elsewhere or even on a different product with the same provider. The ‘best offer obligations’ was an attempt to address this.
This article is intended as a summary of the Victorian best offer obligations and is not intended to be comprehensive nor advice. Ensure you consult the rules directly and obtain advice when developing or reviewing your bills and price change notices.
When a benefit or price change takes effect on a customer‘s plan, the retailer must provide a ‘bill change alert‘ at least 5 business days before the change. This alert must include, among other things:
- The customer‘s metering identifier
- That the customer can use the Victorian Energy Compare price comparator to compare generally available offers
- The nature and date of the benefit or price change
- The retailer‘s estimate of the annual dollar impact of the change for that customer
- A ‘best offer message’ indicating if the customer is on the retailer‘s best plan for them
To determine the best offer, the retailer must identify the plan that would result in the lowest annual cost for that customer based on their annual usage history. This must be either the lowest cost generally available plan or Victorian Default Offer for that customer, or a plan that is even lower cost than those applicable to the small customer. Certain conditional discounts are excluded from this assessment.
The retailer must perform a ‘best offer check’, comparing the customer’s estimated annual cost on their current plan versus the best offer. If the best offer is more than $22 cheaper than the customer’s current plan, the retailer must include a prominent ‘negative best offer’ message on the alert, advising the customer they could save money by switching plans. If the best offer is not cheaper by more than $22 per year, a ‘positive best offer’ message can be included.
Some key points regarding the form of the best offer message:
- It must be on the front page of the alert and contained in a border
- A negative message must include the exact words “Could you save money on another plan” and an estimate of savings
- It must include clear instructions on how to switch to the best offer
In addition to providing best offer alerts, retailers must also perform best offer checks and include appropriate messages on a customer‘s bills at least once every 3 months for electricity and 4 months for gas (or in line with the customer‘s billing cycle).
There are some limited exemptions from the best offer obligations, including:
- For customers with multiple premises where aggregate usage exceeds 40MWh per year for electricity or 1000GJ for gas
- Where the customer receives a single bill for multiple premises
- For certain large customers
Retailers must maintain records sufficient to verify their compliance with these requirements. Failing to comply is a civil penalty requirement under the Essential Services Commission Act. On 30 April 2024, the ESC announced that ReAmped Energy had entered into an enforceable undertaking with respect to an alleged failure to comply with best offer obligations in the Energy Retail Code of Practice between 1 August 2022 and 30 June 2023.
In summary, the Energy Retail Code of Practice places significant obligations on retailers to be proactive and transparent in notifying customers whether they are on the retailer‘s best plan for their circumstances. The aim is to prompt customers to engage with the market and reduce the loyalty tax paid by disengaged customers. However, the requirements are complex and retailers should carefully review the Code to ensure full compliance.
