The Presentation of Electricity Retail Offers in NECF

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook

This article looks at the operation of the AER’s Retail Pricing Information Guidelines (April 2018 – Version 5.0). The purpose of the Guideline is to provide guidance to retailers in the presentation of standing offer prices and market offer prices with the objective of assisting small customers in considering and comparing standing offer prices and market offer prices available. The genesis of the Guideline is section 61(1) of the National Energy Retail Law. Retailers looking to advertise or market offers may also need to consider the ACCC’s Electricity Retail Code. The Retail Code is not considered in this article.

The AER Pricing Guidelines refer to individual plans being plans that are available to a specific customer. The purpose of the Pricing Information Guideline is to enable a customer to compare the offer that is presented by one retailer to another.

Standing offers

Standing offers are available to small customers for the sale and supply of energy under a standard retail contract (s61(2)). A customer will be placed on a standing offer if they either elect to go on one or if they are currently in a premises that is supplied by a retailer under a market retail contract that expires. Furthermore, a move-in customer, to a premises already supplied by a particular retailer will be under a standing offer where that customer has not provided their contact details and entered into a market retail contract.

Market offers

Market offers are offers that retailers make to customers under a market retail contract. The terms and conditions of market offers are not prescribed in the Retail Rules however minimum requirements for market retail contracts are contained within the Retail Rules. Consequently, there is a greater degree of variation in the terms of market retail contracts. The example provided by the AER is that retailers may be able to charge prices more frequently under a market offer plan but may offer lower tariffs or other beneficial terms and conditions.

Restricted v generally available plans

There is a distinction between generally available plans and restricted plans. Generally available plans are those that are available to any customer in the appropriate distribution zone with the appropriate metering configuration. By contrast, restricted plans are dealt with in paragraphs 77 to 78 of the Guideline and are those that are targeted towards specific individuals or an exclusive group and tailored to the specific circumstances of that customer and their needs.

Paragraph 79 of the AER Guideline notes that a retailer must have a basic plan information document for every plan, including restricted plans. In the industry these documents are also used to explain pricing at the time of contract formation i.e. they are important not only under the AER Guideline but also to ensure the customer is contracted and understands the applicable pricing.  Generally available plans must be published on a prominent position on a retailer’s website, and must be labelled basic plan information. Paragraph 81(b) notes that if a plan for a particular distribution zone that has tariff variations requiring multiple BPIDs, the link must be to all of the BPIDs i.e. for each variation. 

When it comes to restricted plans, requirements are specified in paragraphs 83 to 89. Restricted plans are not required to be published on Energy Made Easy. Retailers are not required to publish a link on their website to a basic plan information document or detailed plan information document for restricted plans but are required to advise customers of their availability and to provide them on request. Where a plan is a restricted plan, the plan documents for that plan must clearly state that it is restricted and is not available to all customers.

Publication

Pursuant to the National Energy Retail Law, electricity retailers are required to present standing and market offer plan prices in accordance with the AER Guidelines and must follow the Guidelines when publishing, advertising, or notifying the AER of those prices or any variations to those prices (National Energy Retail Law ss 24 and 37). Retailers are required to present standing and market offer plan prices prominently on their websites in accordance with the AER Guidelines (ss 24 and 37 of the National Energy Retail Law). Finally, retailers must submit information to the AER regarding standing and market offer plans that are generally available to small customers in the manner and form and by the dates specified in the AER Guidelines (s 63 National Energy Retail Law). 

Submission to EME

If you refer to paragraph 23(a) of the AER Guidelines, you will see that retailers are required to submit information to Energy Made Easy on each generally available plan within two business days of the plan becoming available to customers, and must ensure that the HTML link to the plan documents on the retailer’s website is live within the same time frame. Paragraph 31 notes that retailers must provide information and data for all relevant plan fields as detailed in the technical documentation provided for Energy Made Easy. The various requirements when preparing a plan for submission to Energy Made Easy are contained within the AER’s Retail Pricing Guideline.

Language in offers and advertising

The AER’s Retail Pricing Guideline also includes various obligations when it comes to the language used in the presentation of offers including in offers provided to Energy Made Easy or offers advertised or marketed elsewhere.

Paragraph 66 requires that retailers use clear, simple, and widely understood language when presenting plans, terminology should be consistent across information provided to Energy Made Easy and in marketing and advertising where the meaning of the term is unchanged. Retailers are prohibited from using a synonym to a prohibited term to avoid a prohibition.

Table three sets out prohibited and required terms in relation to all marketing advertising and other documentation of energy plans. Prohibited terms include terms such as unconditional discount, non-conditional discount, base discount, termination fee, early termination fee, consumption, standing charge, fixed charge, fixed term, evergreen, fixed benefit period, and others. Permitted terms include usage, supply charge, exit fee, guaranteed discount, contract term, ongoing contract with benefit period, controlled load, demand charge, general usage. 

Discounts- guaranteed v conditional

There are specific criteria when it comes to determining whether a discount is a guaranteed discount or a conditional discount and this is an area that retailers should carefully consider. The relevant parts of the AER Guideline are paragraphs 35 and 36, which state that a guaranteed discount is a discount that does not require any particular action or behaviour on the part of the customer. By contrast, a conditional discount includes a pay-on-time discount, a direct debit discount, or a bundled discount where a customer signs up for both electricity and gas. When it comes to conditional discounts, a retailer must clearly in the data and information provided to Energy Made Easy the conditions that the customer must satisfy the receive the discount, for example by paying a bill on time.

 Additional requirements regarding the description of discounts in advertising and marketing are set out in paragraphs 106 to 110. Paragraph 106 notes that if a retailer makes a representation in marketing or advertising about a specific discount rate, that is the amount or percentage of the discount, the retailer must also provide the information set out in paragraph 34. Paragraph 34 requires retailers to provide, amongst other things, the base level and tariff and discount, the amount and/or percentage of the discount, for percentage discounts what percentage of customers billed the discount applies to. Paragraph 107 provides an example of advertising that would be compliant. 

Discounts v incentives

Again, there is a further distinction between discounts and incentives, incentives are dealt with in paragraphs 38 to 42 of the AER Guidelines. An incentive is a benefit to a customer other than a discount, including non-price benefit, one-off price benefit, or physical gift provided to a customer on entry into a contract.

Non-compliance

The National Energy Retail Laws give the AER powers to monitor, investigate, enforce and report on non-compliance (National Energy Retail Law, s 204). There are a variety of enforcement options available to the Australian Energy Regulator when it comes to non-compliance, including voluntary undertakings, required revisions to internal processes or compliance training, infringement notices, and court proceedings.

More to explorer

AER’s Annual compliance and enforcement report 2020-21

A report published by the AER highlights the range of enforcement activities undertaken during 2020-21 and serves as a clear warning to energy retailers of the importance of ensuring compliance with the Rules and Laws.

Site engineer on a construction site

Is Victoria really banning Embedded Networks, or just Re-naming them?

In a recent article, we summarised the findings of the Expert Panel in the Victorian Embedded Networks Review Draft Recommendations Report (Report). The implementation of the Panel’s recommendations would see the end of ‘embedded networks’ by 2023. However, subject to certain conditions, ‘private networks’ will remain.

modern building, business building

Submission to the AER’s Network and Retail Exemption Guidelines Review

We’ve submitted that the AER should consider implementing a ‘fast track approval’ process for the approval of proposed retrofit conversions of sites where the resulting embedded network would clearly bring consumers better pricing and where the configuration of the network infrastructure facilitates consumers who wish to ‘opt-out.’

As energy sellers know, the regulatory framework is partly designed to set the minimum standards of conduct expected and to punish those that are non-compliant. We believe that it is time that incentives were built into the regulatory framework. Where energy sellers develop products or services that have a clear consumer benefit, they should be rewarded by, for example, faster approvals. Faster approvals result in better commercial outcomes for energy sellers and those should be tied to consumer benefits.

Leave a Reply

Your email address will not be published. Required fields are marked *