Ombudsman to have greater powers to protect consumers with solar, storage

The energy ombudsman could have new powers to oversee complaints relating to new energy technologies provided by electricity retailers, under a new proposal from the Australian Energy Market Commission.

The AEMC has made the recommendation following the publication of its latest retail energy competition review, which found that new forms consumer protections may be necessary as distributed energy technologies like solar and storage become a key part of retailer offerings.

“The Commission has identified that while there is some recourse available to consumers under the [Australian Consumer Law] in relation to new and emerging energy products and services, the main risk for consumers if things go wrong is not having access to an independent, specialised and timely redress mechanism, such as energy Ombudsman schemes,” the review says.

“This could be addressed by extending the jurisdiction of energy Ombudsman schemes to deal with some matters related to new energy products and services that are not otherwise covered by the National Energy Customer Framework.”

The AEMC has recommended that the jurisdiction of the energy ombudsman be expanded, to allow it to have oversight of consumer protections relating to new energy services being offered to consumers, that may include solar and storage installations as well as energy management services.

“The National Energy Customer Framework (NECF) – which governs the sale and supply of electricity and gas to retail customers – was designed for a different era and needs to keep pace with the evolving market,” AEMC chief executive Benn Barr said.

“New products and services such as energy storage systems, energy management services, electric vehicle charging services and solar PV systems are changing the retail energy landscape and they don’t fit neatly within the traditional retailer-distributor-consumer model.”

Relevant to the AEMC’s considerations are changes to the retail electricity market rules that would allow some customers receive their retail electricity supplies through onsite solar and storage, when it is cheaper than maintaining a connection to the mains electricity grid.

The AEMC has recognised that this is the case for a growing number of electricity consumers located in remote and fringe-of-grid areas.

In May, the AEMC set new electricity market rules for such circumstances in May, allowing solar and storage installations in circumstances where maintaining a network connection was more costly and less reliable.

Even in more populated areas, the AEMC noted that an increasing number of electricity retailers reported that offering solar and storage installation services were becoming an essential part of their product offering to consumers. As a result, AEMC recognised that there is a greater role for energy customers wanting to trade surplus energy supplied from rooftop solar installations and that the market rules must evolve to account for this.

“In the past, retailers simply sold energy to customers. Now, customers can generate and store their own energy. So, we need to think about new ways to apply the retail rules, so they move with the times and don’t leave consumers behind,” Barr added.

AEMC chief executive Benn Barr said that the AEMC would progress formal rule changes to establish the new consumer protections.

“A number of these recommendations can be dealt with via the AEMC’s rule change process and we look forward to working with energy stakeholders to take these changes forward,” Barr added.

The AEMC report showed that customer satisfaction with electricity retailers had improved, reaching a new four year high, but only a little over half of all customers still electricity offers represented value for money.

“Higher satisfaction levels are welcome news for the retail sector, although customers clearly think there is still room to improve,” AEMC chief executive Benn Barr said.

“We know the landscape has shifted since the COVID-19 pandemic but these figures show that things were improving in the market, with innovation still happening and the number of competitors continuing to increase – although at lower rates than in previous years.”

The AEMC said that it would also look to add additional protections for consumers for situations where electricity retailers may fail, to shield consumers from bill shock if their retailer was to go out of business.

“The risk of a retailer going out of business is greater today due to the extraordinary economic pressure many businesses are facing due to COVID-19,” Barr said.

“We want to make sure that if this happens in the future, consumers won’t be facing higher energy bills through no fault of their own. Our plan would ensure the customer’s new retailer, called the ‘retailer of last resort’, would be prevented from automatically putting their new clients on more costly default offers.”