In late August, we took a look at what governments and regulators are doing to support customers to manage high energy costs. This week, we take a peek inside energy retail businesses to see what support is offered to customers facing hardship. While retailers have a range of relevant regulatory obligations, their programs go over and above their obligations to help customers in payment difficulty or at risk of payment difficulty. Retailers take their role as providers of essential services very seriously and the intensive monitoring and reporting of their obligations illustrates this. Their willingness to invest further in supporting customers in need is a sign of their broader customer commitment.
National Energy Customer Framework (NECF)
The National Energy Customer Framework (NECF) came into effect in South Australia on 1 February 2013. Its introduction created uniformity of consumer protections for energy customers across all National Energy Market (NEM) states except Victoria. Under the NECF, retailers have certain obligations to support their customers in times of payment difficulty. For example, retailers are required to:
One area that is not as well understood is payment plans. Retailers must offer a payment plan not only to hardship customers but also to other residential customers experiencing financial difficulty.
For this purpose, a customer can be identified as experiencing financial difficulty in one of two ways:
1. The customer notifies the retailer by telephone or in writing of their financial difficulty
2. The retailer has reason to believe the customer is experiencing financial difficulty
Payment plans must have regard to the customer’s capacity to pay, any arrears owing and the customer’s expected energy consumption over the next 12 months.
The payment plan must give the customer the option to pay in advance or in arrears by instalment.
The retailer must also provide the customer with information about the payment plan, including its duration, amounts payable, frequency and due date of instalments.
The retailer’s duty to offer a payment plan is displaced where the customer has had 2 payment plans cancelled in the previous 12 months due to non-payment.
The Victorian Payment Difficulty Framework (PDF) is designed to protect customers that are anticipating or facing payment difficulty. The PDF came into effect in 2019 and provides a set of minimum entitlements for all customers (Standard Assistance) and additional minimum entitlements specifically for customers with arrears (Tailored Assistance). Tailored Assistance is for both customers who can and customers who cannot pay for their ongoing usage. Under Tailored Assistance, retailers are required to provide additional support including:
Evaluating the impact
Regulators monitor and report on how retailers are performing on their regulatory obligations. Retailers have a solid record of high performance in this area.
The Australian Energy Regulator’s January to March 2023 Retail Performance Report found that residential payment plans are continuing their upward trend and are accessed by 112,128 electricity and 22,583 gas customers. Residential disconnections remain low at 0.09 per cent of electricity and 0.07 per cent of gas customers. Average energy debt is down $99 when compared with January to March 2022.
The Essential Services Commission (ESC) undertook a review of the PDF in 2022. The ESC found that consumer groups have observed a reduction in customers being offered payment plans they could not keep up with, and that interactions between customers and energy retailers have continued to improve since the PDF came into effect. Specifically, the ESC noted that “the representative sample of recording of retailer calls with customers experiencing payment difficulty revealed constructive and friendly interactions with customers when providing support” (ESC, PDF implementation review 2022, p.13).
Going over and above
In addition to their regulatory requirements, retailers provide additional measures to support customers to manage high energy costs. For example:
The above examples provide case studies of various means of support offered by retailers across the industry. Some retailers will offer measures ranging from access to a financial counsellor and payment extensions to apps to help keep an eye on energy usage and bundled products. Support programs will vary from retailer to retailer, however it is clear that there is an industry-wide drive to support and provide advice to vulnerable customers. The message for customers is clear: we’re hear to help, ring your retailer as soon as you can if you think you might get into payment difficulty so that you can be supported.
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