Consumer Protection in the Communications Industry: Moving to best practice - Issues Paper (July 2008)

3.2. Energy

The consumer protection framework for the energy sector is the subject of considerable reform. The Ministerial Council on Energy is currently developing the new National Gas Law (NGL) and National Electricity Law (NEL) and has established a national regulator to enforce these laws – the Australian Energy Regulator (AER).[28] The AER was established in 2005 as a constituent part of the Australian Competition and Consumer Commission (ACCC). It operates as a separate legal, decision-making entity to the ACCC.

Some components of the energy-related consumer protection framework remain at the State and Territory level (including retail price regulation, alternative dispute resolution and service performance standards in some jurisdictions).

However, this split of responsibility between the Commonwealth and the States does not have universal support. The Productivity Commission, in their draft report on the Consumer Policy Framework, has recommended that the entire regulation of energy should be moved to the national level:

The inevitable variation in requirements will add to compliance costs for national energy suppliers and thereby to the price of energy. In the face of divergent requirements (such as service performance standards) imposed on suppliers, the task of the Commission’s proposed new energy and water ombudsman would also be rendered much more difficult. Accordingly, the Commission considers that it is now a logical time to implement a single consumer protection regime encompassing all jurisdictions participating in national energy market arrangements.[29]

Until such a move occurs, the consumer protection framework in the energy sector involves a complex mix of State legislation and industry codes of conduct. Some examples include:

Energy Marketing Code (NSW);
Energy Retail Code (SA);
Energy Marketing Code (SA);
Energy Customer Transfer and Consent Code (SA);
Gas Distribution Code (SA);
Electricity Industry Code (QLD);
Marketing Code of Conduct (QLD);
Code of Conduct for the Supply of Electricity to Small Use Customers (WA);
Code of Conduct for Marketing Retail Energy (Victoria);
Customer Transfer Code (WA); and
Electricity Industry Metering Code 2005 (WA).

Typically, each of these codes is closely integrated with the relevant state legislation. For example, industry codes in NSW are made pursuant to Section 28 of the Essential Services Commission Act (NSW) 2002.

There is a strong emphasis on code content in each jurisdiction. A list of common non-price consumer protection provisions can be extracted from the various energy codes:

An obligation to offer to supply and sell energy;
Mandatory financial hardship policies for all retailers;
Retailer of last resort obligations;
Minimum contract terms and conditions for energy contracts;
Prescriptive requirements for the levying of fees and billing arrangements;
Rules for disconnections; and
Prescribed conduct for marketing.[30]

In addition, there are detailed provisions regarding code development, including the establishment of consumer consultative processes and the funding of energy consumer input. Code development is facilitated by the regulator, which in many instances also ‘holds the pen.’

[28] Edwell S, National Energy Regulation: The Way Forward, speech to Australian Institute of Energy, 28 November 2006, <http://www.conferences.unimelb.edu.au/aie2006/files/2A2 Edwell.pdf>.

[29] Productivity Commission, Review of Australia's Consumer Policy Framework: Draft Report, Volume 2, 12 December 2007, page 94, <http://www.pc.gov.au/__data/assets/pdf_file/0006/73662/consumer2.pdf >.

[30] Monash Centre for Regulatory Studies, Consumer Protection in a Deregulated Retail Energy Market, report for the Energy Retailers Association of Australia, April 2008, <http://www.eraa.com.au/db_uploads/ConsumerProtectioninaDeregulatedRetailEnergyMarketFinalReporttotheERAAApril08.pdf>.





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