Consumer Affairs Victoria 5 August 2011

Dear Mr Sarcich

DISCUSSION PAPER - VICTORIA SPECIFIC REGULATORY REQUIREMENTS UNDER THE NATIONAL ENERGY CUSTOMER FRAMEWORK

Thank you for the opportunity to comment on this paper. As Victorian consumers are transitioned into the National Energy Customer Framework (NECF) it is crucial that adequate consumer protection mechanisms are in place to ensure that consumers are not disadvantaged by the change. In this respect, the new framework should replicate at a minimum the same levels of protection for Victorian consumers that currently exist.

Consumer Affairs Victoria (CAV) notes that the NECF will not include the same level of detail as existing industry codes such as the Energy Retail Code and the Code of Conduct for Marketing Retail Energy in Victoria. In particular, the NECF will not prescribe training requirements for energy retailer marketers. While the Australian Consumer Law (ACL) and the NECF set out conduct and information provisions in relation to marketers, these are generic provisions and may not be as effective as a more prescriptive approach.

The marketing code of conduct also includes requirements for marketing representatives to wear an identification badge that includes a photograph and requires retailers to provide information about dispute resolution procedures (section 7.3 of the code ). CAV believes that consideration should be given to retaining similar provisions for Victorian consumers.

The Energy Retail Code goes into significant detail in relation to customers experiencing payment difficulties. In particular, in relation to customers on instalment plans the code requires that retailers must make provisions for recalculating instalment amounts where the difference between the estimated amount and actual amount is significant. This provision is important to ensure that customers who are already experiencing payment difficulties do not end up paying for more energy than they are actually consuming.

The code also sets out procedures for retailers to follow before placing a consumer on a shortened collection cycle and before disconnecting a customer. In these areas, there are elements of the NECF that either reduce, or do not include the same level of protection for consumers as the current framework. For example, the NECF:

  • reduces the number of reminder notices that must be issued by the retailer before placing a customer on a shortened billing cycle;
  • does not specify timeframes for providing reminder or disconnection notices or when new pay dates should be set;
  • does not prevent disconnection for consumers if the failure of the consumer relates to an instalment under their first instalment plan;
  • does not specify what information must be provided to consumers on dual fuel contracts before they are disconnected; and,
  • reduces the number of days for de ~energisation for not paying a security deposit.

CAV considers it important that Victorian consumers are sufficiently protected under the new framework in relation to disconnection and reconnection procedures.

The NECF allows retailers to ask a customer for a security deposit if the customer owes money to the retailer, and no minimum amount is set. Currently in Victoria, the Energy Retail Code states that a retailer may only require a refundable advance (security deposit) from a customer if they owe more than $120 to the retailer. CAV is concerned that this change may mean that even if a customer owes only a very small amount of money to a retailer they may be required to provide a security deposit and also go through a credit check.

Finally, the discussion paper also refers to the unfair contract terms provisions within the ACL in relation to deemed distribution contract terms. The paper contends that the ACL and the NECF will sufficiently protect consumers from potentially unfair contractual terms and as such, Victorian specific regulation is not required. However, it is worth noting that a consumer would have to prove a contract term is unfair for the relevant provisions of the ACL to apply.

If you would like to discuss any of the issues raised in this submission further, please contact Jane Delahey, Policy Adviser, by email JaneDelahey@justice.vic.gov.au or by phone (03) 86846492.

Yours sincerely

Dr Claire Noone

Executive Director

Consumer Affairs