Regulator drafts new retail energy guidelines in push for “honest and fair” consumer experience

The Australian Energy Regulator is seeking feedback on a range of updates to its retailer guidelines, following a series of market rule changes and reforms aimed at demystifying electricity bills and energy plans for consumers and keeping retailers honest.

The AER on Friday published its draft Retail Guidelines, with a request for “specific feedback” on consumer outcomes, implementation costs for retailers, and on how to make the guidelines fit-for-purpose as new types of energy plans are introduced across the ever-evolving retail market. 

The AER updates follow the implementation of a rule change package that was requested by state and federal energy ministers to boost consumer engagement, strengthen protections, and increase transparency in the retailing of electricity and gas.

In 2024, a “super complaint” alleging “sneaky, confusing energy pricing tactics” by Australian electricity retailers sparked an investigation by the Australian Competition and Consumer Commission, amid concerns consumers are being deliberately misled about which energy plans to choose.

The Choice complaint outlined three “widespread concerning practices” by energy retailers, including prompts to switch better offers that refer to plans that do not appear to be available, or the customer is not eligible for.

One of these practices, the “same name, different price” phenomenon, was also explored in research published by Victoria’s Essential Services Commission, which found that around 360,000 customers in that state were on older, more expensive versions of retail electricity plans that had a cheaper alternative with the same name.

Off the back of the super complaint and the energy ministers’ directive, a series of new rules have been signed off by the Australian Energy Market Commission (AEMC), including one that requires energy retailers to display so-called “better offer” alerts both inside bills as well as in emails, bill summaries, and cover letters. 

The draft AER Retail Guidelines updates and streamlines rules retailers must follow, including on providing and presenting plan information, preparing and issuing benefit change notices and preparing and issuing customer bills.

“We have updated the guidelines to reflect changes in the energy rules and market, simplify energy communications and regulations and ensure customers are receiving clear, useful and timely information and support,” the AER said on Friday.

“In doing so, we have reduced our reliance on prescriptive content and formatting requirements. These are replaced with an overarching principle which requires retailers to develop communications in a way that is honest and fair.”

Whether or not the draft guidelines have nailed the “honest and fair” directive will no doubt be the subject of debate in submissions – feedback is open until July 17 – find links here.

So far, energy consumer advocates have called for a deeper reset of the retail system, with changes that rely less on consumer engagement and more on default settings that leave more consumers better off. 

“Consumers shouldn’t be penalised simply because they don’t have the language, cognitive or digital skills – or even the available time – to constantly be on the lookout for cheaper prices,” Energy Consumers Australia chief Brendan French said on the subject last year.

“All too often we see that those with the lowest means are paying the highest prices, and that just shouldn’t happen for an essential service.”

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