Cracking down on pay-on-time penalties

Media release

21 November 2019

In response to a Commonwealth rule change proposal the Australian Energy Market Commission (AEMC) has announced today plans to crack down on unfair discounting practices by energy retailers.

The Liberal National Government welcomes this announcement, building on our commitment to ensure that energy companies are putting customers first.

Some retailers offer big discounts to encourage consumers to sign up to a new energy plan but these discounts are only available if certain conditions are met, such as paying on time.

Minister for Energy and Emissions Reduction requested the proposed rule change that will limit the fee as a result of a customer failing to pay on time to no more than the retailer’s reasonable costs.

“This rule change builds on the work we’ve already done to help ensure a fair playing field for customers when negotiating their energy bill.

“The current rules are for the most part impacting customers who are already doing it tough, experiencing financial hardship. Some of the most vulnerable customers have been missing out on discounts and forced to pay more on their energy bill, we want to see an end to this practice”, Minister Taylor said.

The Australian Competition and Consumer Commission (ACCC) has found that many energy customers fail to pay on time and as a result, can suffer significant bill shock.

Those experiencing financial hardship, are most affected by these conditional discounting practices. Currently, 59 per cent of customers in this category aren’t able to meet these conditions and miss out on discounts.

The Government sought a change to the rules, through a request to the AEMC, to ensure penalties for not meeting the conditions of a discounted energy plan are fair.

The draft determination by the AEMC will better protect consumers by ensuring the impact of late payment fees and pay-on-time discount conditions are limited to a retailer’s reasonable costs.

The AEMC is inviting public submissions on the draft determination until 16 January 2020.

The Government is focused on delivering more affordable energy for Australian households, and this new rule change complements actions already taken including:

  • Capping high-priced standing offers and introducing transparent reference pricing obligations.
  • A rule change requiring energy retailers to notify their customers when their discounts are about to finish or change;
  • A rule change requiring energy retailers to notify customers of price changes at least five days before they take effect.

For more information on the Government’s framework on energy and emissions reduction visit energy.gov.au/energy-policy-blueprint-fair-deal-energy.

Minister for Energy and Emissions Reduction