Revisiting Financial Hardship Obligations in NECF

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As interest rates continue to climb so too does the risk of electricity customers being placed in a position where they are not able to pay their bills on time. ‘Hardship’ can be experienced by anyone and everyone, whether you are working full time or rely on government support. Energy retailers in NECF have a range of obligations in relation to hardship and, as we move towards winter bills, should be reviewing their existing processes to ensure that they are providing the best support possible to those customers facing payment difficulties.

Under the National Energy Retail Rules (NERR), energy retailers in Australia have obligations to support customers experiencing payment difficulties or hardship. Part 3 of the NERR outlines specific requirements for retailers to identify, assist and protect hardship customers.

Retailers must have a customer hardship policy that complies with guidelines set by the Australian Energy Regulator (AER). This policy must be approved by the AER and address how the retailer will “meet the minimum requirements for a customer hardship policy” specified in the National Energy Retail Law, including waiving late payment fees, allowing payment plans and referring customers to government assistance programs. (NERR 75B)

Retailers must inform all customers of the existence of their hardship policy and provide copies upon request at no charge. (NERR 71) Promotion of hardship programs increases the likelihood that customers will understand their rights and enter into a retailer’s hardship early. Early management of hardship is in a retailer’s best interests. Retailers must offer payment plans to hardship customers that take into account their capacity to pay, arrears owing and expected future consumption. Plans should allow customers to pay in advance or arrears via instalments. (NERR 72)

Retailers must waive late payment fees for hardship customers. (NERR 73) They must also allow hardship customers to use Centrepay, a free bill payment service, even if it is not offered under the customer’s retail contract. If Centrepay is not currently offered, the retailer must review the contract and transfer the customer to an alternative that does offer Centrepay at no penalty. (NERR 74)

The AER monitors retailers’ performance in supporting hardship customers through “hardship program indicators” that measure things like numbers of customers entering hardship programs, forms of assistance provided, and customer experience. Retailers must report on these indicators according to the AER’s guidelines. (NERR 75). It is very likely that the AER will carry out reviews and audits over the coming months to ensure that retailers are compliant in this area.

Recommendations for retailers:

  • Comprehensively review the applicable regulatory requirements and test and improve their processes, training and documentation.
  • Develop innovative payment plans tailored to individual customers’ needs and capacity to pay. For example, seasonal payment plans for agriculture customers or plans that coincide with Centrelink payment cycles.
  • Partner with community groups and financial counsellors to get a better understanding of what they can do, to identify hardship customers and determine appropriate assistance.
  • Additional relief should be provided e.g. debt waivers, payment matching programs, emergency assistance grants. Promote programs widely and make them simple to access.
  • Review all customer communications to ensure a respectful, compassionate tone for hardship audiences. Explain programs and customer’s rights clearly without legal jargon.
  • Enhance staff training on key obligations, and how to sensitively engage with and support customers affected by issues like family violence.
  • Consider outreach programs to identify and support hidden or at-risk hardship audiences. Get to know how audiences’ needs are unique and pertinent to their situation.

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