Ensuring energy contracts are clear and fair, ESC Issues Paper

Deregulation in Victoria’s energy retail market has not delivered fair outcomes for all households accessing their essential energy services.

The State Government has taken a number of steps to help combat the systemic issues in the market through its Energy Fairness Plan and the establishment of the Victorian Default Offer (VDO).  Effective 1 July 2019, the VDO and other interventions designed to re-regulate electricity pricing will ensure that more Victorian households receive a fair price on their electricity service.

Unfortunately, Victorian households have no equivalent protections on their gas services.

Consumer Action Law Centre (Consumer Action) and COTA Victoria have provided comment on the Essential Services Commission’s (ESC) Ensuring energy contracts are clear and fair, Issues paper.

We strongly support the interventions proposed in the recommendations from the Independent review into the electricity and gas retail markets in Victoria outlined in the issues paper.  If implemented effectively these interventions will complement the VDO to ensure effective protections are in place for more Victorian households across both main sources of energy.

There are many reasons that Victorians do not regularly engage in the electricity and gas markets, and they should not be ripped off simply because they don’t have the capacity or ability to regularly look for the best energy price.

The recommended reforms should remove the need for households to be constantly vigilant for changes in their underlying pricing or discount.  It will also ensure that there are rules which guarantee that contracts default to a fair price arrangement, as opposed to default pricing being at the discretion of retailers.  Leaving it to the discretion of the retailers does not benefit consumers particularly because many people do not have either the capacity of ability to read the fine print.

However, through initial discussions surrounding this consultation, we have become aware that the ESC does not plan to apply these changes retrospectively.  This is concerning, as it means people who are not currently engaged with the energy market will miss out.

It is critical that reforms are retrospectively applied to protect all who do not engage with the electricity market following the implementation of the VDO, as well as protecting everyone engaging in the gas market who do not have equivalent protections but are impacted by the outcomes these interventions aim to deter.  Ultimately, getting a fair outcome in Victoria’s essential energy retail services markets must not require active engagement.

You can read the full submission here [PDF].

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