At the end of May, Victoria’s Essential Services Commission (ESC) released its review of the Payment Difficulty Framework (PDF). This project commenced in 2021 and sought to investigate whether retailers had appropriately implemented, and were effectively complying with, the new rules.
The headline of the media release, “Victoria’s energy laws help consumers manage energy costs – but retailers can do more”, appeared to suggest that while the new rules were effective, retailers were not delivering on their intent. From the AEC’s perspective, the report in fact indicates retailers have by and large done an excellent job in implementing what was a fundamental yet challenging reform. While the outcomes for consumers are mostly positive, there are some areas of concern, but in our opinion, these are due to unintended consequences arising from the design of the PDF itself and the broader societal challenges of supporting customers in difficulty, rather than any mass failings of retailers.
Here, we take a closer look at the report and what the ESC actually found.
The ESC’s statement as compared to the findings of the report
The ESC’s media release raised concerns with retailer processes in assisting customers, saying:
“More customers are receiving more appropriate assistance, and there have been fewer disconnections for non-payment. But of those customers that were disconnected, over half had not received assistance. More work needs to be done by retailers to engage with these customers to break this debt-disconnect cycle.”
The design of the PDF is comprehensive. Importantly, it assumes that the challenge of engaging customers was one of awareness. The PDF created a customer entitlement to assistance. This was framed as an important distinction from the pre-PDF framework, where retailers were required only to make customer support available. In effect, the difference is where the onus of action sits. The PDF requires a retailer to offer support to a customer where signs suggest they might be in payment difficulty and make clear how that support might help the customer to mitigate that difficulty. The pre-PDF framework required a retailer to have support available to customers but required the customer to take action to seek out support. But it is important to note that in both frameworks, the retailer can't mandate a customer to take up support or to take unilateral action to ensure support is implemented. Again, this was by design. The final PDF intentionally removed automatic elements that had been proposed in its draft design, with advocates and retailers alike preferring to promote customer agency and encouraging better engagement.
The report itself found that the number of customers receiving tailored assistance as compared to pre-PDF hardship assistance has increased dramatically. That is very positive. The framework requires retailers to proactively offer assistance at a number of junctures, yet still, more than 50 per cent of customers who are disconnected do not take up any assistance despite it being presented to them directly. It is difficult to see how that is a failure of the industry (and maybe, not of the energy system at all).
Importantly, as part of undertaking the review, the ESC engaged Orima to undertake a call recording study, publishing its findings alongside the final report. This study analysed the communication between retailers and 94 customers experiencing payment difficulty. While for obvious reasons the analysis didn’t include engagements between retailers and those customers who didn’t receive support, it allows stakeholders a unique opportunity to assess the quality of engagements between retailers and their customers when a customer is seeking assistance. It seems reasonable to suggest that it is likely that the analysed calls would be illustrative of a retailer’s engagements with other customers not part of the survey.
Orima found that in 90 per cent of calls where assistance was offered, customers were assessed as being ‘satisfied’ or ‘very satisfied’ with the support offered by the retailer. This does not appear reflective of a scenario where the actions of retailers might be seen as the cause of a significant proportion of customers failing to obtain assistance prior to disconnection.
Further, in almost all calls, operators were found to have been respectful of customers (98 per cent), to have listened to and acknowledged the customer (95 per cent), and to have provided support to the customer (94 per cent). In only 2 per cent of calls the operator was assessed as dismissive, and in 1 per cent of calls the operator was assessed as judgemental.
So, if 90 per cent of customers are satisfied with the assistance they have been offered, and a minute percentage of customers had a negative experience when seeking assistance, how might retailers do more to engage those who did not receive assistance prior to disconnection?
Vague statements suggesting retailers can or should “do more” does not add much insight into the actionable steps that might be taken to improve outcomes for customers.
The Orima research clearly indicates that retailers have taken great leaps in their customer service and support, for which the industry should be congratulated. But the media release doesn’t mention the positive experiences of customers engaging with their retailers and isn’t discussed in the report itself until page 15.
Improving outcomes for Victorians experiencing payment difficulty
It is in the interests of all stakeholders that Victorians experiencing payment difficulty are able to get the support they need and avoid disconnection. Given the evidence here, it suggests that customers who are engaging with retailers tend to have a positive experience. It seems that the greatest opportunity for the regulator and industry to genuinely increase the number of customers engaging, would be to promote the ease and success of reaching out to retailers, or answering the call when support is offered, rather than suggesting that “more needs to be done”.
While the ESC’s review did not seek to assess the efficacy of the framework itself, that too might bring additional benefits. If more than 50 per cent of disconnected customers are not receiving any support, but 90 per cent of customers who engage are receiving assistance they are satisfied with, that seems to suggest the problem lies not with the retailer’s processes, but instead with the timing or method of communication the framework requires. It may be that there aren’t any alternative approaches to better engage these customers, but to refuse to ask the question and place the blame on compliant retailers seems a stretch.
As the cost of living crisis continues to create challenges for consumers, Victorians can be assured that their retailer is there to help, and in 90 per cent of scenarios they’ll receive support tailored to their circumstances, always delivered in a respectful and friendly manner – and that’s a message we can all get behind.
There has been growing concern about inflationary pressures, the prospect of higher interest rates and higher fuel costs for the economy generally. But what do these factors mean for electricity prices? We have taken a detailed look at the factors at play and how they are likely to determine and influence our power prices.
The Australian Energy Regulator recently released its Draft Determination of the Default Market Offer for 2022-23, where it intends to switch from the currently used indexation methodology to a cost build-up methodology - a significant move that will influence how the final DMO price is set.
Retail household electricity prices in the National Electricity Market are the lowest they have been for eight years, but how do the prices stack-up internationally? New Australian Energy Council analysis compares the prices against the world’s 38 OECD countries.
Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.