AER Statement of Expectations of energy businesses: Protecting customers and the energy market during COVID-19

The Australian Energy Regulator (AER) works to make energy consumers better off, now and in the future. Protecting vulnerable consumers while enabling them to participate in the energy market is one of the AER’s strategic priorities.

The COVID-19 pandemic dramatically changed the lives, businesses, income and working arrangements of the Australian community, and our stakeholders. Energy use and consumers’ capacity to pay were affected, alongside a need to ensure customers were not disconnected while required to stay-at-home. This posed particular challenges for both residential and small business consumers, as energy is essential to our daily lives.

The AER was proactive in moving quickly to respond to the pandemic by issuing its initial Statement of Expectations (the Statement) to energy businesses in March 2020. The Statement was developed collaboratively through engagement with industry and consumer groups to provide households and small businesses with additional supports during the pandemic. Working with industry and consumer stakeholders, we extended our regulatory reach beyond the law and rules framework, to provide consumers with additional help when they needed it most.

The Statement contained 10 principles that set out how consumers should be supported. This included expectations such as no disconnection, increased access to payment plans and hardship programs, no referral for third party debt collection, and no energy outages (beyond necessary).

The AER recognised that the effectiveness of the Statement depended on proactive collaboration and engagement with a diverse range of stakeholders. This gave the AER a deep understanding of the industry and consumer impacts, and helped inform four iterations of the Statement during 2020-2021. Each time we ensured it was fit for purpose and did not reach any further than it needed to. Our collaborative approach involved:

  • Targeted stakeholder engagement, including roundtables with retailers, consumer groups and market bodies. This elicited frank feedback about pandemic impacts on energy consumers and industry, ensured the Statement remained targeted and fit for purpose, and enabled the AER to work with energy networks on a voluntary offer and rule change to share financial risks more evenly through the supply chain.
  • Increased engagement with the diverse range of frontline agencies (including councils of social services, financial counsellors and community legal centres) that make up the AER’s Customer Consultative Group, to gain information and insights about the impacts on energy consumers.
  • Adapting our approach as the environment changed, through consultation with a broad group of stakeholders and monitoring impacts through increased and voluntary retailer performance reporting.
  • Issuing clarification and guidance to industry participants on meeting the expectations of the Statement, and working with ombudsman schemes to monitor and measure the Statement’s implementation.
  • Using stakeholder networks to spread the message and achieve the intended outcome for consumers.

Through the Statement, the AER initiated the first proactive protections for energy consumers in response to the pandemic. This informed other regulatory responses to the pandemic - including the April 2020 National Cabinet principles to support access to essential services for households and small businesses, and the Essential Services Commission’s disconnection advice.

The Statement proved effective in supporting consumers, resulting in zero disconnections from March to August 2020. Disconnections for residential and small business electricity and gas consumers from March 2020 to March 2021 were also down 82% compared to the same period across 2019 to 2020.

The Statement received broad support from industry, consumer groups and ombudsman schemes. It was cited by the Energy and Water Ombudsman Scheme NSW as a driving force behind the 26% decrease in complaints in the 2019-20 financial year. We also saw a very high level of adherence from industry in adopting and giving effect to the principles in the Statement.

Further, our 2021 stakeholder survey results indicate that more of our stakeholders, when compared to 2018, agree that the AER is: engaging effectively; showing leadership in pursuing priority issues; and protecting vulnerable consumers.