By Agnes King
The regulatory landscape is not getting any easier for energy retailers
In a pre-election environment where cost of living pressures dominate the public debate, energy regulators will continue to prioritise vulnerable consumers and how energy retailers price and advertise their energy plans in their enforcement activity, experts say.
New rules improving energy retailers’ response to customers experiencing family violence, introduced last year, are just the thin edge of the wedge.
The Australia Energy Regulator imposed penalties to the tune of an eyewatering $10 million, according to its 2023-24 report. While not all were retail-specific, it is explicitly focused on protecting consumers.
Looking forward, Bec Jolly, Energy Charter’s Director of Energy Equity, says obligations related to the growing number of customers on life support registers are finally garnering the attention of rule-setters, with fines imposed on Ergon Energy and the commencement of Federal Court proceedings against Origin earlier this year.
Jolly says a big gap exists in energy regulation when it comes to who qualifies for critical life support, and energy retailers’ obligations.
“There's been so much misconception about what it means to be a life support customer,” she says.
There are currently no obligations to provide medical evidence when registering for life support. Consequently, “critical” can mean anything from someone on a nebulizer to breathe, to a person with a back injury who uses a massage chair for recovery, says Jolly.
People can't afford their bills
Customers are also using life support to avoid disconnection for non-payment. The hefty cost of this rapidly expanding cohort is borne by everyone and comes on top of legacy debt that energy retailers are carrying from COVID, when they were blocked from disconnecting people experiencing hardship.
“Energy debt affects all of us in some way”
“We all bear the burden on the bill,” Jolly says. “Energy debt affects all of us in some way, shape or form, because [retailers] have to recoup that cost.”
Against this backdrop, Sarah Sheppard, CEO of the Victorian Essential Services Commission, says the energy transition has also thrust a myriad of new and complex choices upon consumers. This has put retailers on the hook to support them with better decision-making.
“Electrification is a hot topic in Victoria. We know retailers will get queries from consumers such as ‘How do I abolish my gas connection?’. We should support customers in making that choice if they want to,” Sheppard says.
This is stretching energy retailers’ customer service teams at a time when loyalty is waning, monopolies are being eroded, and customers are becoming increasingly varied in their requirements from energy providers.
“Retailers are getting mixed messages from regulators,” says Ron Ben-David, Professorial Fellow at Monash University.
“On the one hand they are hearing consumers need to face price signals to modify their behaviour, on the other hand retailers are hearing they need to manage risk on behalf of their consumers,” he says.
“Regulators have dropped the ball on contract design”
At the same time, Ben-David feels regulators have dropped the ball on contract design, leaving consumers bamboozled and having to largely fend for themselves.
“Contracting in the retail market is becoming increasingly complicated for consumers and will soon become an incomprehensible challenge for most,” he says.
This will apply even greater pressure to energy retailers’ customer teams, whose remit is already huge, warns Jolly.
With hardship numbers increasing, and more people in energy debt that have ever been before, customer retention may not be the biggest priority.
“There's a lot that's changing in the energy sector, and for energy customers in a very short period. We're not seeing huge recruitment rounds coming in customer teams. You've got pretty much the same customer team investments, they just have different remits,” says Jolly.
Sarah Sheppard (Victorian Essential Services Commission), Bec Jolly (Energy Charter) and Ron Ben-David (Monash University) will join energy retailers AGL, Synergy, Origin, ENGIE, Genesis NZ, Aurora, Flow Power, Ergon, Horizon and Momentum at the Energy Retail Excellence conference, sharing insights and approaches to energy customers through the transition. Learn more here.
To access the detailed conference program, download the brochure here.
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