Compliance monitoring - energy billing practices

One of our compliance and enforcement priorities in 2022-23 was ensuring that retailers are informing customers about whether they are on their best offer when purchasing energy.

We conducted a proactive compliance monitoring program focusing on whether retailers are complying with their obligation to provide customers with best offer messages on bills.

Our approach

Step 1: Information gathering

We obtained information from 17 retailers who collectively provide retail services to most Victorian residential energy consumers about their best offer message practices.

Step 2: Analysis and response

We reviewed the information provided by the retailers. We identified some instances of non-compliance, several areas for improvement and some better practice examples.

Where non-compliance has been identified, we addressed this in line with our Compliance and Enforcement Policy. This ranges from working with retailers to remediate issues and, in more serious cases, taking enforcement action.

Step 3: Publication

Our analysis highlighted that to improve compliance across the industry, there was a need for the commission to provide guidance regarding some aspects of the best offer obligations. In this respect, we have published a guideline on the form and content of deemed best offer messages. The guideline outlines the commission's expectations of compliance and includes better practice examples.

Outcomes

Our compliance monitoring program resulted in the following outcomes:

• Red Energy paid $254,436 in penalties over alleged breaches of customers best offer obligations
• AGL paid $799,656 in penalties over alleged breaches of customers best offer obligations
• developing and implementing remediation plans with retailers
• taking other compliance actions including issuing six warning letters to Victorian retailers.

Helping customers navigate the energy market is a compliance and enforcement priority for 2023-24. This includes ensuring retailers are providing customers with accurate best offer messages. We will continue to work with retailers to improve their compliance. 

Best offer obligations

Energy retailers are required to regularly display information on customers’ bills telling them whether or not they are receiving their retailer’s best offer. These requirements are outlined in clauses 108–111 of the Energy Retail Code of Practice (the best offer obligations).

The best offer obligations were introduced in 2019 as part of major reforms that were intended to help customers navigate the energy retail market. They promote transparency in the market by keeping customers informed of whether they could access a better offer from their retailer. This includes how much money could be saved by switching to a better offer.

Best offer obligations overlap with our other compliance and enforcement priorities. In particular:

• our enduring priorities of protecting vulnerable consumers
• ensuring customers are provided with adequate assistance when experiencing payment difficulties.

If retailers fail to comply with best offer obligations, customers may not be aware:

• of their option to choose a cheaper offer from their retailer
• that offers from other retailers are available on the government comparison website Victorian Energy Compare.

For customers who are not on their retailer’s best offer, it may mean staying on a more expensive plan for longer, resulting in higher bills. This affects all Victorian customers, but higher bills may also contribute to payment difficulty and can exacerbate vulnerability being experienced by customers.