AER seeks payment deferral rule for retailers helping consumers through COVID-19

retailers, energy efficiency, aer, energy networks

The Australian Energy Regulator (AER) has welcomed speedy consultation on its proposed rule change to support the market as energy retailers provide payment plans and other assistance to customers impacted by the COVID-19 pandemic.

AER Chair Clare Savage said the AER has proposed a rule change to the Australian Energy Market Commission (AEMC) that will allow retailers to defer payment of network charges by up to six months in respect of hardship customers or customers on deferred payment plans as a result of the COVID-19 pandemic.

“We know that customers are doing it tough at the moment so the AER asked retailers to provide hardship support, payment plans and other help customers need to pay their bills. That extra support can affect retailers’ cash flow,” Ms Savage said.

“If an energy retailer ceases operation as a result of extending its support to COVID-19 impacted customers, it could result in less competition in the market. This means fewer options for customers and possibly higher prices, as well as adding to Australia’s increasing unemployment rate.

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“Allowing retailers to defer their payment of network charges for a short period will provide a buffer for retailers who are providing this extra assistance, further supporting the market and competition.

“It will also build upon the voluntary support measures network businesses are providing through the April to June Networks’ Relief Package.

“We have asked the AEMC to progress this as an urgent change to the National Electricity Rules to provide immediate protection for the market, and welcome their move in doing so.”

In March the AER released its Statement of Expectations of energy businesses, outlining how it expects retailers and distribution businesses to assist customers during COVID-19. This included:

  • Energy retailers offering payment plans or hardship arrangements to all residential and small business customers who indicate they may be in financial stress, regardless of whether the customer meets the ‘usual’ criteria for that assistance;
  • No residential or small business customer who may be in financial stress is disconnected before 31 July 2020 and potentially beyond.
  • Customers are not referred to debt collection agencies for recovery actions, or credit default listing until at least 31 July 2020.
  • Disconnection, reconnection and/or contract break fees for small businesses that have ceased operation, along with daily supply charges to retailers, are waived during any period of disconnection until at least 31 July 2020.

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“We have seen a lot of goodwill from retailers and distributors in supporting their customers. It’s good to see businesses recognising that these unusual times call for all of us to go above and beyond the usual support,” Ms Savage said.

“We are and will continue to monitor the market to confirm customers are getting the help they need.

“While it’s too early to know full impact of COVID-19 on retailers and their customers, this rule change will provide support to retailers while they provide additional and much needed payment assistance.”

It’s proposed the new rule take effect from July 1, 2020 until December 31, 2020.