Res Online 29 - November 2019

Number 29
November 2019

Res Online 29 - providing up-to-date information, statistics and analysis on energy and water complaints.

The Ombudsman's View

July to September 2019

Insights from EWOV cases on Best Offer and Victorian Default Offer

In this issue of Res Online, we present some first quarter insights on how two of the reforms introduced recently by the Essential Services Commission are affecting customers. These reforms — Best Offer notification and the Victorian Default Offer (VDO) — are intended to help energy customers find better deals. While it's early days, we've already received numerous cases in which the customer raises concerns about one or both of these reforms. Largely these cases highlight customer confusion, most commonly about how and when they'll be notified about the new entitlements, and whether they're eligible for them.

For reforms to be effective, customers need to be told about (and receive) entitlements

Throughout 2019 we've seen some really significant regulatory developments for customers by way of the Payment Difficulty Framework (from January 2019) and now the Best Offer and VDO reforms (from July 2019). For these reforms to do what they're intended to do, customers must know about their entitlements and actually receive them. Our case experience points to the need for retailers to do a better job of making sure customers are receiving the necessary information to enable them to benefit.

Cases up quarter on quarter, but down on same time last year

While lower than cases for the July to September 2018 quarter, July to September 2019 cases to EWOV were up on cases for the April to June 2019 quarter — up 14% overall, up 6% in electricity, up 34% in gas and up 15% in water.  Billing continues to be the top issue and was the source of the highest increases. In electricity and gas, seasonal factors may have had an impact — for example colder conditions in winter can translate into unexpectedly high bills for some customers. In water, the inclusion on bills of the annual parks charge may have come as a surprise to some customers. These are both factors which can lead customers, who are trying to keep on top of top of costs, to query their bills.

Other case studies in this issue

Cynthia Gebert

Energy and Water Ombudsman (Victoria)

Cynthia Gebert

Energy and Water Ombudsman (Victoria)

If you have any feedback about Res Online, please contact Janine Rayner, EWOV's Communications and Policy Manager at: janine.rayner@ewov.com.au.

Overview

Issues Watch

Best Offer and Victorian Default Offer

In 2017 the Independent Review into the Electricity and Gas Retail Markets in Victoria found that Victorians were paying more than they should for energy. The review concluded that many customers weren't engaging with the energy market, or finding the best energy deals for their circumstances. The review made a series of recommendations, which the State Government subsequently approved. From these, the Essential Services Commission formulated a number of reforms, which came into effect on 1 July 2019.

The reforms are inter-connected, working together to help ensure that customers who can't (or choose not to) engage with the market aren't charged excessively. The overall aim is to make the energy market simpler and more affordable for all customers. The reforms will also help ensure that customers are given clear information to help them make better buying decisions.

The Best Offer notification requires energy retailers to use bills to notify customers where there's a better plan available to them and how much they could save by switching to that plan. This notification to customers — headed 'Could you save money on another plan?' — must be on electricity bills at least once every 3 months and on gas bills at least once every four months.

The Victorian Default Offer (VDO) is a fair price set by the Essential Services Commission. While not necessarily the best price, it is intended to safeguard customers who can't (or choose not to) engage with the market. Since 1 July 2019, energy retailers have been required to automatically move customers who were on existing standing offers — some 126,031 residential and 43,279 small business customers — to the VDO. In other states, the Default Market Offer (DMO) was implemented on 1 July 2019 under National Energy Market reforms. The DMO differs from the VDO in that it serves as a price cap, not as a regulated and subsequently a reference price.

Preparing EWOV for the reforms

To prepare for the introduction of the new provisions, we trained EWOV staff around the reforms, updated our existing customer fact sheets, and introduced a new ‘What is a best offer?’ fact sheet.

We also introduced new 'Best Offer 'and 'Victorian Default Offer' sub-issues under our 'billing > tariff' issues category.

Early insights from EWOV's July to September 2019 cases

Concerns customers have raised with us about Best Offer:

  • Being confused about the Best Offer notification
  • Not being notified of their retailer’s Best Offer
  • Being confused about how to access the Best Offer
  • Being confused about how the Best Offer is calculated
  • Not receiving their retailer's Best Offer despite being a longstanding customer  
  • Finding their existing discounts were reduced in new contracts made available by retailers
  • Wanting to backdate the Best Offer and/or have it applied to their most recent bills.

Concerns customers have raised with us about Victorian Default Offer (VDO):

  • Being confused about the VDO and eligibility
  • Being unable to access the VDO because they're in an embedded electricity network
  • Suspicion of misleading marketing in relation to the VDO
  • Not being notified by their retailer of newly available, cheaper plans
  • That they were automatically rolled onto the VDO when their cheaper contract expired
  • Solar customers having difficulty accessing the VDO
  • Being advised of the VDO in change of contract notices and prompted to review their tariff, then losing previously available discounts.

This last point emphasises the findings of the Inquiry into the National Electricity Market report published in September 2019 by the Australian Competition and Consumer Commission (ACCC) — which observed a fall in advertised discounts from as high as 40% to less than 20%, and a significant reduction in the number of plans offering conditional discounts since the VDO and Default Market Offer were implemented.

Read more

On the Victorian Government's website

On the Essential Services Commission's website

On the ACCC's website

Top Issues

Case Studies

Cases by Industry

Systemic Issues

Summary of systemic issue Investigations opened and closed

July to September 2019

  Energy Water LPG
Open/Under Investigation 5 2 0
Closed 4 2 0

Note: Systemic issue Investigations opened and closed during the above period that cannot yet be identified as being systemic haven’t been included.

Systemic issues identified through EWOV's case handling

July to September 2019

Energy

Disconnected customers not taken back or reconnected

Two cases received by EWOV highlighted that, having disconnected customers, an electricity retailer refused to take them back or reconnect them because of their credit history. In each case, the retailer held the billing rights to the customer's site. Under clauses 18 and 19 of the Energy Retail Code, as the designated/financially responsible retailer for a site, a retailer cannot refuse a customer its standing offer, even where the customer is in arrears. The retailer confirmed that it has clearly defined processes (based on the requirements in the Energy Retail Code) for connecting or reconnecting customers in situations of this type. It said it also has an internal escalation process for customers who fail a credit check for a retail contract, when it has the billing rights for a site. This process ensures that its normal mechanisms are bypassed to create a customer account and re-energise the customer's property. The retailer said that the agent and teams concerned had undergone refresher training on the relevant provisions and associated processes and procedures. SI/2019/20

Bill smoothing arrangements not covering usage

Through our case handling we identified an issue with a gas retailer’s calculation of bill smoothing arrangements. The gas retailer explained that its bill smoothing payments were calculated via estimations. It said that, in October 2018, it made an improvement to provide more accurate forecasting of basic meters for bill smoothing arrangements. This resulted in the identification of amounts being paid against bill smoothing arrangements that were not covering expected usage, and subsequently a need for customers to increase payments to reduce large amounts owing at true-up. SI/2018/14 

Low gas pressure affecting appliance use

EWOV identified 15 cases related to a gas supply issue in a particular area. On reviewing the complaints and testing supply to the affected customers, the gas distributor found the volume/supply was at a lower than normal level, which affected customers’ use of appliances. The distributor advised that two 63mm mains in the area were linked together in July 2019, providing a dual feed. It said gate outlet pressures were also raised to provide greater capacity to the area. SI/2019/26

Advice of payment difficulty assistance

In one case received by EWOV, we identified that the energy retailer had disconnected the customer without providing clear, unambiguous information about payment difficulty assistance. This is a requirement under the Energy Retail Code. We understand 63 customers were similarly affected. The energy retailer advised that it had updated its disconnection notice to include the required information. It also advised that the affected customers received Wrongful Disconnection Payments. SI/2019/30 

Water

Charges now applied where they weren't previously

One case to EWOV made us aware that a water company had recently started to include sewage disposal charges on the bills of customers whose property is connected to the main sewer, but who had not previously been billed. The water corporation said it had been reviewing its asset data to ensure customers were being charged for services provided. In March 2019, as a result of the review, it identified 2,606 properties with sewer availability that weren't being charged. 679 of these properties were now being billed accordingly. The water corporation said there were valid reasons why the other properties were still not being billed. It also advised that it had improved its manual monitoring of properties to which the charges should be applied, and was working on a permanent systems update. SI/2019/21 

Inappropriate sharing of details

A water corporation informed EWOV of a privacy breach. It explained that in some situations, where an agent (for example a real estate agent) handles multiple accounts, it sends one email to the agent containing several water bills. It said the breach occurred when an agent’s details were updated incorrectly and sent to another customer. The water corporation said it had reported the breach to the Privacy Commissioner. It said that, to prevent the issue reoccurring, it had retrained the staff member involved, provided additional training to other relevant staff and developed training modules. SI/2019/24

Public submissions made by EWOV

July to September 2019

Priority Energy Datasets Consultation Paper

The Treasury, Canberra

EWOV believes the consultation paper addresses all the data sets important for the implementation of the Consumer Data Right (CDR) in energy. Our comments addressed the six identified priority datasets — National Metering Identifier (NMI) standing data fields, metering data, customer provided data, billing data, retail product data and distributed energy resource (DER) register data. We also raised the issue of dispute resolution for CDR complaints, observing that resolution of energy-related CDR complaints will require specialist energy expertise.

EWOV's submission online  

The Treasury's consultation paper

Strengthening protections for life support customers – Draft Decision

Essential Services Commission

Most of EWOV's interactions with customers dependent on life support equipment are about billing errors around the application of life support concessions, or poor information provision by retailers to customers eligible for those concessions. In this context we observed that strengthening life support protections should help refresh (and maintain) customer registers, raise the profile of those customers and create opportunities to ensure they're properly informed about relevant concessions. We supported the intent of the draft decision to align Victoria's regulatory requirements with the new life support obligations in the National Energy Retail Rules. We also supported additional protections to improve information flows (between customers, retailers, distributors, exempt persons) to ensure life support registers are promptly updated and well-maintained, and the new protections are extended to embedded network customers.

EWOV's submission online

ESC's draft decision

Electricity Distribution Code Review Issues Paper

Essential Services Commission

In our submission, we observed there is significant scope to reduce the number of electricity distribution cases EWOV receives — by improving distributor and business-to-business processes, and providing better customer service by way of higher service standards and greater engagement. We made comment on some specific aspects of the paper, supporting those with brief case studies.

EWOV's submission online 

ESC's issues paper

Glossary

Find out more about EWOV's issue and complaint terminology.