Compliance monitoring – July 2022 price change notifications

May and June 2022 saw unusually high prices in the electricity wholesale market. News of the market volatility created uncertainty for consumers about upcoming increases to their electricity bills.

When retailers change their customers’ prices, they must inform affected customers by issuing a 'bill change alert' under clause 106 of the Energy Retail Code of Practice.

To ensure Victorian customers received clear information about their changing plans, in the period 1 July 2022 to 1 August 2022, we monitored the behaviour of retailers and examined the messaging sent to customers ahead of the expected price increase on 1 August 2022.

Monitoring compliance

Our approach was to proactively remind all retailers of their obligations in relation to the upcoming price change and then perform checks on bill change alerts issued by retailers.

1. We issued a proactive warning to all retailers. On 11 July 2022, we sent all retailers a letter to remind them of their key obligations.
2. We obtained examples of bill change alerts issued by 18 retailers. These retailers represented 53 per cent of the electricity retail market.
3. We reviewed the bill change alerts to check if retailers were compliant with the Electricity Code of Practice.

Outcomes

Our analysis showed that most of the bill change alerts examined were compliant.

However, the review undertaken by staff identified the following matters of concern, which can be grouped into three categories:

1. Price change information – concerns about the provision of adequate information about pricing.
2. Providing clear information – concerns about issuing bill change alerts in accordance with the objective of the rules (to give customers assistance that enables them to engage confidently in the energy market).
3. Deemed best offer messages – Concerns about providing a best offer message in accordance with the requirements. We are considering some of these matters in association with our ongoing Best Offer messaging compliance program.

We have detailed the issues identified with retailers in the table below.

Where potential non-compliance was identified, we addressed this in line with our compliance and enforcement policy. Retailers who were found to have issues with their bill change alerts have either made changes or plan to make improvements going forward to ensure their alerts are compliant with the relevant rules.

Next steps

We consider that providing customers with clear and helpful information when their prices or plans change is essential to helping them engage in the energy market. Therefore, we will continue to monitor bill change alerts into the future and, should the need arise, at the next significant price change date we may reach out to retailers to seek information and documents which shows that they are providing the required information to customers.

Price changes – retailer obligations

Retailers can only increase prices once per year

On 1 July 2020, new price certainty obligations took effect. This means that:

• For many customers on market retail contracts, price increases happen one month after the network tariff prices change (this usually happens annually). Last year, new network prices for electricity customers took effect on 1 July 2022 and therefore price increases occurred on 1 August 2022.
• Where market retail contracts are fixed-term, retailers can only increase tariffs on the date on which the fixed term expires, and each anniversary of that date.
• For customers on standard retail contracts, the tariffs and charges for the sale of energy to the customer under the contract are 'standing offer prices'. The standard retail contract provides that standing offer prices will not be varied more often than once every six months (noting the Victorian Default Offer for electricity is varied annually).

Exempt market retail contracts are not covered by the above rule.

Retailers must give notice in advance of a price change

When energy retailers change their customers’ prices, they are required to give them a written notice called a ‘bill change alert’.

A bill change alert must be issued:

• at least five business days before the price change takes effect.
• in writing by the customers’ preferred method of communication.

The Energy Retail Code of Practice specifies what information must be provided in a bill change alert. It includes:

• the customer’s current and new prices inclusive of GST
• information that the customer may use Victorian Energy Compare to compare offers in their area
• a best offer message, informing customers of whether they are on the retailer’s best plan
• an estimate of the annual dollar impact of the price change based on each customer’s annual usage history.

Bill change alerts were introduced as a requirement for retailers on 1 July 2019 as part of a suite of new rules designed to help customers navigate the energy market.