Protecting consumers and easing pressure on energy retailers impacted by COVID

A rule change announced today by the Australian Energy Market Commission (AEMC) will greater assist energy retailers supporting consumers facing hardship due to the impacts of the coronavirus crisis.

The new rule, proposed by the Australian Energy Regulator (AER) in May, will allow some retailers to defer the payment of network charges to network providers for six months, starting today and lasting until 6 February 2021.

Under the change, eligible retailers can defer their network costs for residential and small business customers who are on a payment plan or qualify for hardship or a deferred debt arrangement.

Minister for Energy and Emissions Reduction Angus Taylor said that network costs can represent over 40 per cent of retail electricity bills. Therefore, this rule change will provide immediate cash-flow relief to retailers to help the market manage the impact of COVID-19.

“In line with the Government’s expectations, retailers are supporting customers that are facing hardship, including deferring debt for those struggling with bill payments,” Minister Taylor said.

“This new measure will help retailers provide much-needed support, by ensuring that energy networks help in assisting vulnerable Australian households and businesses.”

Making sure that smaller retailers survive the COVID-19 pandemic is important to continuing competition growth in the retail energy market and making sure energy prices keep coming down for residential and small business customers.

The ACCC recently found competition is improving, with smaller retailers continuing to put pressure on the Big 3, providing the best market offers in all distribution regions across the National Electricity Market.

The key features of the deferral mechanism include:

  • government-owned retailers or those registered as a Retailer of Last Resort are not eligible to access the deferral mechanism;
  • eligible retailers will be charged interest on any deferred network charges at a rate of three per cent per annum;
  • network providers will be able to defer the payment of a proportionate amount of Transmission Use of System charges to transmission network service providers; and
  • retailers and DNSPs are required to negotiate in good faith and agree on processes to give effect to the rule as soon as possible, or no later than 10 days after the commencement date.

The Government’s expectations of energy companies through the COVID-19 pandemic were first outlined in the AER’s Statement of Expectations in March, which have recently been updated to extend key consumer protections to at least the end of October.

“We have seen energy retailers take action to meet the Government’s strong, but reasonable expectations the lights stay on during this challenging period,” Minister Taylor said.

“The Government will continue to take appropriate steps to protect customers, but it is important that those customers who can pay their bills continue to do so, as this will assist retailers to provide support to those who need it most.

“For those customers struggling to pay their energy bills, I strongly urge you contact your energy retailer, to discuss what support can be provided.”

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