Victorian Energy Enforcement Outcomes: Lessons for Retailers and other Energy Sellers

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The Essential Services Commission (ESC) has announced a new round of enforcement actions in relation to the obligations of energy retailers under the Energy Retail Code of Practice (ERCOP).  This article examines those enforcement outcomes and the lessons that all energy sellers should heed as a result.

The ESC announced that Origin Energy has paid two penalty notices, each for $36,348 (200 penalty units). One penalty related to a breach of clause 89(1)(c) of the ERCOP for failing to action a payment assistance request from a financial counsellor on behalf of a customer. Clause 89(1)(c) states that the retailer must “in a timely manner provide, or use its best endeavours to provide, a residential customer who is entitled to receive assistance under this part with that assistance.”

The second penalty related to conduct that constituted a breach of a civil penalty requirement under section 3 of the Act for failing to record a customer’s life support details in a register within one business day of being advised that the customer resides or is to reside at a premises under s40SG (1) of the Electricity industry Act 2000 (Vic).

Lesson

Energy sellers should review their systems and processes in relation to these areas of compliance and consider if improvements can be made.

Similarly, AGL has recently been under scrutiny for allegedly applying system controls restricting their customers from accessing the Victorian Governments Utility Relief Grant Scheme (URGS), which helps people experiencing hardship to pay their utility bills. The obligations  to assist customers who are experiencing hardship arise under the payment difficulty framework which has the following 3 key objectives:

  • to help residential customers avoid getting into debt with their retailer;
  • to make it easier for residential customers to pay for their ongoing energy use, repay their debt when they have missed a bill and lower their energy costs; and
  • to ensure residential customers are only disconnected for non-payment of a bill as a measure of last resort.

In response to the alleged wrongful acts, the ESC has accepted an enforceable undertaking from AGL, whereby AGL will:

  • conduct annual training about payment assistance for all staff who assist customers;
  • conduct regular quality assurance checks on interactions between staff and customer who contact AGL regarding difficulties paying their energy bills; and
  • appoint an independent auditor to complete a review of the implementation of the actions in the undertaking and provide that report to the ESC.

This undertaking was provided in relation to enforcement action under clauses 89(1)(c), 89(1)(d) and 111A(1)(A)(i) of the ERCOP and AGL have taken steps to rectify system controls, waive affected customers’ energy debts and make wrongful disconnection payments to affected customers.

Lesson

System design must involve compliance expertise. Simple IT system amendments can result in inadvertent breaches of regulatory obligations. Energy sellers must ensure that changes to systems and processes do not result in compliance breaches.

Finally, the ESC has received undertakings from Energy Australia Pty Ltd, Red Energy Pty Ltd, and Lumo Energy Australia Pty Ltd following allegations of failure to obtain explicit informed consent from customers prior to signing them up for energy contracts.

The ESC chairperson Kate Symons noted that explicit informed consent is a key energy compliance and enforcement priority:

“Customers must be properly informed about an energy plan and must give their explicit consent to enter a contract or transaction for that plan. Failure by retailers to obtain this consent impacts public trust in the sector to act fairly and in good faith to deliver essential gas and electricity services to Victorians.”

In accepting that they acted in contravention of the ERCOP, the companies remediated affected customers and accepted court enforceable undertakings to demonstrate action plans to improve compliance with the ERCOP which relates to customer contracts, billing disputes, payment difficulties and content of bills.

The enforceable undertaking will ensure that the energy companies review and improve training on EIC requirements, increase quality assurance checks, appoint an independent reviewer for practices and controls review, and appoint an independent auditor to review implemented actions and report to the commission.

Lesson

EIC is a critical area of compliance. All energy sellers should review the EIC obligations within the ERCOP and ensure that they have systems and processes in place to obtain and record EIC as required.

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