Missing the Mark
When it commenced on 1 January 2019 the Payment Difficulty Framework (PDF) represented a major shift in the Victorian retail energy sector's response to payment difficulty.
Under the PDF, energy retailers have been required to take a much more proactive and tailored approach when assisting financially struggling customers.
Almost two years on, (and one pandemic later), it is time to assess how effective the PDF has been. The purpose of Missing the Mark is to explore this issue in anticipation of the Essential Services Commission (ESC) review of the PDF, scheduled for early 2021.
Through our investigation we found that while regulatory requirements around payment difficulty have undergone a step change, the culture of the retail energy sector has not. Despite disconnection rates having dropped dramatically, too many vulnerable customers are still missing out on PDF entitlements.
We need to ask why this is the case - and how we, as a sector, can do better.
As we reach the end of 2020 and head into a sustained economic recession, we are at a timely juncture to examine our approach to financial difficulty in the Victorian retail energy sector - in terms of both design, implementation and compliance.
Missing the Mark makes the following key recommendations:
- Consideration should be given to improving the communication of PDF entitlements through more direct and personal means such as SMS or phone calls as opposed to generic and multi-purposed notices (such as bills and reminder notices).
- Consideration should be given to improving training of all staff in relation to the PDF, to avoid that knowledge becoming ‘siloed’ within retailer hardship teams.
- Consideration should be given to appointing dedicated staff to provide culturally safe assistance to customers from cultural groups that are currently poorly served by the PDF (e.g. customers who identify as an Aboriginal and/or Torres Strait Islander person).
- Consideration should be given to whether the entitlement to tailored assistance for customers who can afford their ongoing usage (i.e. TA1) is currently too broad, and whether the PDF could be made more effective for those in genuine payment difficulty if it was narrowed.
- Consideration should be given to further policy measures for those who cannot afford their energy even after PDF entitlements have been fully and properly applied. This is a small, but important cohort of customers. It should be clarified that while debt waivers are positive, they should not be applied in lieu of PDF entitlements – but only in addition to them.