The AEMC is seeking feedback on how regulations for protecting consumers may need to evolve as new energy products and suppliers enter the market, and digitalisation changes how consumers get information about their energy supply.
Over recent years we have seen major changes in the way electricity is supplied with increasing take-up of solar PV and batteries, and a range of new business models to supplying energy consumers. New technologies, including smart home management systems with demand response capabilities, are expanding and getting cheaper for households and businesses. We are moving from a system of one-way, passively consumed energy to a two-sided market where consumers are actively involved in producing energy and adjusting their demand in response to price signals.
Two issues papers released today by the AEMC explore how the consumer protections framework may need to change so consumers can continue to benefit from product innovation while also receiving appropriate protections.
“It’s important that rules and regulations to protect energy consumers aren’t left behind by the pace of change,” said Acting AEMC Chief Executive Suzanne Falvi.
“We want to make sure consumers – including those who are most vulnerable – can access energy on fair and reasonable terms.
“Technology is moving us towards a world with high levels of two-way trade of electricity in a wholly connected energy market where consumers are rewarded when buying and selling energy in real time.
“This review will consider how best to protect consumers in this evolving market. At the same time, we want to avoid the risk of out-of-date regulations inhibiting future digital innovation as we move towards a more two-sided market,” Ms Falvi said.
This work follows our 2019 retail energy competition review which mapped the consumer protections that energy consumers receive under the National Energy Customer Framework and Australian Consumer Law, and identified potential areas for further review.
The NECF is designed to complement the ACL by providing additional consumer protections for the supply of essential energy services. It works to strengthen consumers’ rights to access energy on fair and reasonable terms and is also supported by industry-led voluntary codes.
The first issues paper considers whether this framework of consumer protections could be better integrated to make it simpler and easier for energy consumers to know their rights and who to go to if they have problems with their new energy products, services and suppliers. The paper also explores the potential for increasing use of self-regulation through voluntary codes as a way of encouraging the energy industry to proactively consider how consumers of new products and services can be appropriately protected.
The second issues paper asks stakeholders to consider how the digitalisation of the energy market is challenging some regulatory provisions under the NECF for the traditional sale of energy. The paper specifically covers issues related to information provision, cooling-off periods and explicit informed consent requirements.
Submissions on both issues papers are due by 13 February 2020.
The project team will work closely with the Australian Competition and Consumer Commission, the energy market bodies, governments, industry and consumer groups throughout the review.
In tandem with the issues papers, the AEMC encourages stakeholders to read Energy Consumers Australia’s paper on Contemporary energy consumer protections released last week, which provides a framework to consider reform to consumer protections.
CEO of Energy Consumers Australia Rosemary Sinclair said: “For the modernisation of our energy system to be successful, we need consumers to have the confidence to engage, whether that be to manage their energy use, get the best price or invest in new technology.
“That means in a rapidly changing energy sector, we need consumer protections to stay up to date and be adaptive to individuals making unique decisions about how to use power.”
This work is part of the AEMC’s 2020 Retail energy competition review. A final report on any recommended changes to the consumer protections framework for energy markets will be published along with the annual retail competition review report due in June 2020.
Media: Kellie Bisset, 0438 490 041; (02) 8296 7813
AEMC – How energy consumers are protected under the NECF and ACL: 2019 Retail energy competition review
The AEMC’s 2019 Retail energy competition review mapped the protections that consumers in the national electricity market receive under the NECF and the ACL. This was the first step in assessing whether energy consumers are receiving appropriate protections while also minimising any barriers to innovation.
National Energy Customer Framework (NECF)
The NECF is a suite of legal instruments that regulate the sale and supply of electricity and gas to retail customers. The NECF does not currently apply in Western Australia or the Northern Territory, and only applies in a limited manner in Victoria which has its own Energy Retail Code
AEMC discussion paper: How digitalisation is changing the NEM
The AEMC is working with the Energy Security Board, AEMO and the AER to develop a high-level design for a two-sided marketplace, to be delivered to the COAG Energy Council in March 2020 as a priority.