The Australian Energy Market Commission (AEMC) has proposed a new approach to consumer energy bills that would make them simpler and more user friendly.
The Commission says it is time to update the way energy billing requirements are treated under the National Electricity Retail Rules – striking the right balance between enabling market innovation and keeping consumer protections in place.
The draft determination responds to a rule change request from the Minister for Energy and Emissions Reduction Angus Taylor. It also follows recommendations in the AEMC’s 2020 Retail Energy Competition Review to develop and implement flexible regulatory arrangements more suited to a changing market.
“The ‘Smart Decade’ has globally transformed the way consumers engage with their energy retailer,” the Commission says.
“We now have more digital platforms that allow two-way communication between retailers and consumers, who can see their energy use in − or close to − real time. There are more smart meters, there is more access to data and in future there will be new third-party providers to help consumers participate more actively in the energy market.”
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In making its draft determination, the Commission has considered how energy bills should evolve to fit this new landscape – and continue to keep up with rapid and ongoing change.
“Stakeholders generally agree that consumers find language and terminology confusing,” the determination says.
“Many consider that improvement is needed and would be likely to significantly help consumers understand their own bills.”
The AEMC has proposed replacing the prescriptive billing provisions currently set out in the rules with a mandatory guideline to be developed by the Australian Energy Regulator that would govern how retailers prepare and issue bills to small customers.
In developing the guideline, the regulator would need to make sure it achieved key goals, like providing for standard language and terminology in bills, contracts and offers, protecting small customers while promoting choice and competition, and considering the cost of any change to both retailers and consumers.
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A guideline is a more flexible way to make sure energy bill requirements keep pace with change. When the current billing rules were introduced in 2012, the energy market looked very different, with only 37 per cent of Australians owning smart phones. By 2019, smart phone penetration was at 91 per cent and there are now more than double the number of retailers offering hundreds of different energy offers.
The proposed new approach moves away from a one-size-fits-all solution and acknowledges consumers want different things from their bills. But it will still put mandatory requirements on retailers, ensure minimum bill content requirements and offer more protections than alternatives such as an industry code of practice.
The new approach promotes key billing objectives such as including cost and usage information in bills that helps small customers use energy efficiently, participate in the market and consider investing in self-supply energy options like solar and batteries.
Submissions close on February 4, 2021.