Retailer affordability and disconnection obligations

The NECF is a suite of legal instruments that regulate the sale and supply of retail energy, including the National Energy Retail Law (NERL) and National Energy Retail Rules (NERR) among others. The NECF requires retailers to offer help when:

• the customer tells the retailer they are having payment difficulties 

• the retailer independently identifies a customer may be experiencing payment difficulties.¹

Any customer may experience payment difficulties with their energy account from time to time. However, some may have significant financial, personal or household challenges. In that case, the customer is currently known as a ‘hardship customer’ in the NECF:

a residential customer of a retailer who is identified as experiencing financial payment difficulties due to hardship in accordance with the retailer’s customer hardship policy.²  

Each retailer is required to have what is currently known as a ‘customer hardship policy’ in the NECF. The policy must be approved by the Australian Energy Regulator (AER), adhere to strict content requirements³ and include mandatory phrases called standardised statements.⁴ A retailer is obligated to communicate the policy to a customer if it thinks the customer may be a ‘hardship customer’⁵ and when it has positively identified that a customer is a ‘hardship customer’.⁶

‘Hardship’ is not defined in the NECF, but the standardised statements describe factors such as death in the family, household illness, family violence, unemployment and reduced income⁷ The policy must also state the ways the retailer commits to identifying these customers, including indicators like having incomplete payment plans, receiving a disconnection warning or being disconnected for non-payment.⁸

The retailer’s policy must detail the ways it commits to helping people it has identified in accordance with the policy, including access to what is currently known in the NECF as a ‘hardship program’.⁹ Access to the program usually involves the customer agreeing, and adhering, to a payment arrangement that considers their capacity to pay. However, the NECF definition of ‘hardship customer’ applies whether or not a customer is part of the program and adhering to a payment plan.

Disconnection for non-payment is prohibited in some circumstances¹⁰, and retailers are also required to:

give effect to the general principle that de-energisation (or disconnection) of premises of a hardship customer due to inability to pay energy bills should be a last resort option.¹¹

Before disconnecting a customer, a retailer must meet all its affordability obligations and follo strict steps to try and reach the customer.¹² Each step provides the customer with an opportunity to contact the retailer – if the customer does make contact, it is a crucial chance for the retailer to identify how it can assist the customer.

However, if a customer has two incomplete payment plan arrangements in the preceding 12 months, they are considered to have ‘two strikes’. The retailer no longer has to offer assistance to the customer, even if it has identified that the customer is having payment difficulties.¹³ Not all retailers decline to continue helping a customer after two incomplete payment arrangements – but we see the customer impact in our complaints when retailers do rely on this rule. Customers experiencing significant financial, personal and household challenges may still end up disconnected despite the last resort principle and may have difficulties getting reconnected.