NERR in depth: Disclosure obligations of retailers

NERR in depth: Disclosure obligations of retailers

AU Energy Compliance

We have previously written about the requirements for pricing disclosure when it comes to energy retailers. Disclosure is a key obligation and forms the basis of the subsequent contractual relationship between and energy customer and retailer.

For those retailers operating in jurisdictions that have adopted the National Energy Customer Framework, additional disclosure obligations are found in rules 63 and 64 the NERR.

Rule 63 provides that required information given to a customer before the formation of a market retail contract may be provided electronically, verbally, or in writing so long as it is also provided in a single written disclosure statement after the formation of the contract. Rule 63 further provides that where information is simply provided after the formation of a market retail contract, it must be provided in a single written disclosure statement.

Rule 64 sets out the required information, i.e. the information that must be provided to a small customer. Required information includes:

  1. all applicable prices, charges and benefits to the customer, early termination payments and penalties, security deposits, service levels, concessions or rebates, billing and payment arrangements and how any of those matters may change during the contract.
  2. The commencement date and duration of the contract, the availability of extensions, and the termination of the contract if the customer moves out during the term of the contract.
  3. Any electronic transactions including detail on how the transaction is to operate and, as appropriate, an indication whether the customer will be bound by the early transaction or will be recognised as having received the information contained in the electronic transaction;
  4. the rights that the customer has to withdraw from the contract during the cooling-off period including detail on how to exercise those rights;
  5. the customer’s right to complain to the retailer in respect of energy marketing activities including the activities conducted by 3rd party engaged by the retailer and, if the complaint is not satisfactorily resolved by the retailer, detail of the customer’s right to complain to the energy ombudsman.

From the above list, retailers most commonly fail to comply with c) which requires not only a list of transactions that are to be carried out electronically but also detail on how the transaction is to operate and whether the customer will be bound by the transaction. This would incorporate a retailer that bills electronically. In the case of electronic billing, to comply with rule 64, a retailer would need to explain that bills are to be sent electronically and to give some commentary on that process, would need to explain that the customer will be required to pay bills sent electronically, and would need to explain when the bills are deemed to have been received.

The required information specified in rule 64 must include or be accompanied by a copy of the market retail contract.

Rule 64 is important as it also determines the start of the cooling-off period under rule 47. A small customer has a right to withdraw from a market retail contract with no penalty within the period of 10 business days commencing on the date the customer receives the required information under rule 64. Retailers must create records of each withdrawal and treat them as if they were a record of explicit informed consent.

The wording of rule 47 creates some uncertainty as to the effect of a retailer that sends rule 64 information at 4 PM on a Thursday. The uncertainty is whether the Thursday should be counted as day one of the 10 business day cooling-off period. While the wording ‘commencing with the date’ could be expected to mean that Thursday is included, from a customer’s perspective, there is a difference between receiving the required information at 8 AM as opposed to 4 PM