Understanding Part 3 of the National Energy Retail Rules: Customer Hardship

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Introduction

The National Energy Retail Rules (NERR) are a set of rules that regulate the retail sale of electricity and gas to customers in those states that have adopted the national framework within the National Energy Market (NEM). The NERR aim to protect the interests of customers and promote efficient and competitive retail markets. The NERR cover various aspects of the retail relationship, such as contracts, billing, payment, disconnection, connection, metering and customer information.

One of the key components of the NERR is Part 3, which deals with customer hardship. Customer hardship refers to the situation where a customer is unable to pay their energy bills due to financial difficulties, such as unemployment, illness, family breakdown or other unforeseen circumstances. Customer hardship can affect anyone, regardless of their income, location or energy consumption. Customer hardship can have serious consequences for the customer’s well-being, health, safety and quality of life.

Part 3 of the NERR recognises that customer hardship is a complex and sensitive issue that requires a tailored and flexible approach from retailers. Part 3 imposes a number of obligations on retailers to assist customers who are experiencing or at risk of experiencing hardship. Part 3 also gives customers certain rights and entitlements to access support and assistance from their retailers. Part 3 aims to help customers overcome their hardship and manage their energy bills in a sustainable way.

What does Part 3 of the NERR include?

Part 3 of the NERR consists of nine rules, numbered from 70A to 76. These rules cover the following topics:

  • Definitions: Rule 70A defines some key terms used in Part 3, such as customer hardship policy, customer hardship policy guideline and hardship program indicators.
  • Obligation of retailer to communicate customer hardship policy: Rule 71 requires retailers to inform their hardship customers of the existence of their customer hardship policy and provide them with a copy on request.
  • Payment plans: Rule 72 requires retailers to offer payment plans to their hardship customers that are based on their capacity to pay, their arrears and their expected energy consumption. Retailers must also inform their hardship customers of the details and conditions of the payment plans.
  • Waiver of late payment fee for hardship customer: Rule 73 requires retailers to waive any fee for late payment of a bill for their hardship customers.
  • Payment by Centrepay: Rule 74 requires retailers to allow their hardship customers to use Centrepay as a payment option, if requested. Centrepay is a service that allows customers to pay their bills by deducting money from their Centrelink payments. Retailers must also review their market retail contracts and offer alternative contracts that make Centrepay available, if appropriate.
  • Hardship program indicators: Rule 75 requires the Australian Energy Regulator (AER) to determine and publish hardship program indicators, which are measures of the performance and effectiveness of retailers’ hardship programs.
  • Customer hardship policy guideline: Rule 75A requires the AER to develop, maintain and publish a customer hardship policy guideline, which specifies the processes, timeframes and requirements for retailers to submit and obtain approval of their customer hardship policies.
  • Customer hardship policies: Rule 75B requires retailers to submit and obtain approval of their customer hardship policies from the AER. Retailers’ customer hardship policies must comply with the customer hardship policy guideline and the minimum requirements set out in the National Energy Retail Law (NERL). Retailers must also implement and publish their customer hardship policies on their websites.
  • Waiver of debt for hardship customer: Rule 76 allows retailers to waive any fee, charge or amount of arrears for their hardship customers, in accordance with their customer hardship policies.

What are some key regulatory obligations for retailers under Part 3 of the NERR?

Retailers have a number of regulatory obligations under Part 3 of the NERR, which are designed to ensure that they provide adequate and appropriate support and assistance to their hardship customers. Some of these obligations are:

  • Identify hardship customers: Retailers must identify customers who are experiencing or at risk of experiencing hardship, using a range of methods, such as self-identification, referrals, payment history, credit checks and customer feedback.
  • Inform hardship customers: Retailers must inform their hardship customers of the existence of their customer hardship policy and provide them with a copy on request. Retailers must also inform their hardship customers of the details of the payment plans and other assistance available to them.
  • Offer payment plans: Retailers must offer payment plans to their hardship customers that are based on their capacity to pay, their arrears and their expected energy consumption. Retailers must also review and revise the payment plans as necessary, taking into account any changes in the customer’s circumstances.
  • Waive fees and charges: Retailers must waive any fee for late payment of a bill for their hardship customers. Retailers must also waive any early termination charge or other penalty for the early termination of the customer’s previous contract, if they transfer the customer to an alternative contract that makes Centrepay available.
  • Provide other assistance: Retailers must provide other assistance to their hardship customers, such as energy efficiency advice, referrals to financial counsellors or government assistance programs, and flexible payment options, such as Centrepay, direct debit or bill smoothing.
  • Report on hardship programs: Retailers must report on their hardship programs to the AER, using the hardship program indicators determined by the AER. Retailers must also comply with any audits or requests for information from the AER regarding their hardship programs.
  • Obtain and maintain approval of customer hardship policies: Retailers must submit and obtain approval of their customer hardship policies from the AER. Retailers must also ensure that their customer hardship policies comply with the customer hardship policy guideline and the minimum requirements set out in the NERL. Retailers must also implement and publish their customer hardship policies on their websites.

What are some requirements and recommendations for retailers under Part 3 of the NERR?

The following table summarises some of the requirements and recommendations for retailers under Part 3 of the NERR, based on the customer hardship policy guideline issued by the AER. The table is not exhaustive and retailers should refer to the NERR, the NERL and the customer hardship policy guideline for more details and guidance.

RequirementRecommendations for compliance
Retailers must include the standardised statements specified by the AER in their customer hardship policies, which inform their customers of how the retailer will comply with the minimum requirements as set out in section 44 of the NERL and provide guidance to customers on their rights and retailer obligations with respect to Part 2, Division 6 of the NERL.Retailers should use the exact wording of the standardised statements provided by the AER in their customer hardship policies, and ensure that they are consistent with the rest of the policy.
Retailers must include clear and specific statements of the actions they will take to meet the minimum requirements for a customer hardship policy in section 44 of the NERL, which are:Retailers should provide clear and specific examples of how they will implement each of the minimum requirements in their customer hardship policies, and explain how they will measure and monitor their effectiveness.
(a) processes for the early identification of residential customers who are experiencing payment difficulties due to hardship;Retailers should use a range of methods to identify hardship customers, such as self-identification, referrals, payment history, credit checks and customer feedback.
(b) processes for the early response by the retailer when a residential customer is identified as experiencing payment difficulties due to hardship;Retailers should respond to hardship customers promptly and proactively, and offer them support and assistance as soon as possible. Retailers should also assign a dedicated staff member or team to deal with hardship customers, and ensure that they are trained and empowered to handle hardship cases with sensitivity and respect.
(c) the provision of flexible payment options for payment of energy bills by hardship customers;Retailers should offer payment plans to hardship customers that are based on their capacity to pay, their arrears and their expected energy consumption. Retailers should also review and revise the payment plans as necessary, taking into account any changes in the customer’s circumstances. Retailers should also provide other flexible payment options, such as Centrepay, direct debit or bill smoothing, and explain the benefits and risks of each option to the customer.
(d) processes to identify appropriate government concession programs and appropriate financial counselling services and to notify hardship customers of those programs and services;Retailers should maintain an up-to-date list of government concession programs and financial counselling services that are available to hardship customers, and provide them with relevant information and referrals. Retailers should also assist hardship customers to apply for any eligible concessions or grants, and liaise with financial counsellors or other support agencies on behalf of the customer, if requested.
(e) an outline of a program for the provision of energy efficiency advice to hardship customers;Retailers should provide energy efficiency advice to hardship customers that is tailored to their specific needs and circumstances, and that can help them reduce their energy consumption and costs. Retailers should also provide hardship customers with information and access to any energy efficiency programs or initiatives that they offer or participate in, such as rebates, incentives, audits or retrofits.
(f) any variations specified in the Rules to the application of Part 2, Division 6 of the Law to hardship customers;Retailers should comply with any variations specified in the Rules to the application of Part 2, Division 6 of the Law to hardship customers, such as the waiver of late payment fees, the waiver of debt, and the payment by Centrepay. Retailers should also inform hardship customers of these variations and how they affect their rights and obligations.
(g) processes for review of the appropriateness of a hardship customer’s market retail contract;Retailers should review the appropriateness of a hardship customer’s market retail contract, and offer them an alternative contract that makes Centrepay available, if appropriate. Retailers should also waive any early termination charge or other penalty for the early termination of the customer’s previous contract, if they transfer the customer to an alternative contract that makes Centrepay available.
(h) processes for early identification of hardship customers who may require different assistance from that available under the retailer’s customer hardship policy;Retailers should identify hardship customers who may require different assistance from that available under the retailer’s customer hardship policy, such as customers who are experiencing chronic or long-term hardship, customers who are facing imminent disconnection, or customers who have complex or multiple needs. Retailers should also provide these customers with appropriate and tailored assistance, such as debt waivers, hardship grants, or referrals to specialist services.
(i) any other matters required by the Rules.Retailers should comply with any other matters required by the Rules, such as reporting on their hardship programs to the AER, using the hardship program indicators determined by the AER. Retailers should also comply with any audits or requests for information from the AER regarding their hardship programs.

Conclusion

Part 3 of the NERR is an important part of the regulatory framework that governs the retail sale of energy to customers in the NEM. Part 3 sets out the obligations and rights of retailers and customers in relation to customer hardship, which is a complex and sensitive issue that affects many customers in Australia. Part 3 aims to help customers overcome their hardship and manage their energy bills in a sustainable way, while ensuring that retailers provide adequate and appropriate support and assistance to their hardship customers. Part 3 also requires the AER to play a key role in developing, approving and monitoring customer hardship policies and programs.

Retailers should familiarise themselves with the requirements and recommendations under Part 3 of the NERR, as well as the NERL and the customer hardship policy guideline, and ensure that they comply with them in their dealings with their hardship customers. Retailers should also review and update their customer hardship policies and programs regularly, taking into account any changes in the regulatory environment, customer feedback and best practice. Retailers should also communicate and engage with their hardship customers effectively and respectfully, and provide them with the information and assistance they need to overcome their hardship and manage their energy bills in a sustainable way.

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