Red Energy Pty Limited (Red Energy) has paid seven infringement notices totalling $474,600 issued by the Australian Energy Regulator (AER) for allegedly removing hardship and payment plan protections from consumers when they moved house.
This left these consumers vulnerable to disconnection and debt collection processes, including credit default listings.
Following a referral to the AER from a financial counsellor, and a subsequent investigation, the AER alleged that Red Energy’s systems and processes failed to adequately identify and assist up to 371 customers who were receiving hardship assistance when the customer moved to a new address but remained a Red Energy customer.
AER Deputy Chair Justin Oliver said energy companies have an important ongoing responsibility to identify and support customers facing financial difficulties to manage their energy bills, particularly with the current cost-of-living pressures.
“When a customer changes their address, they should continue to receive the benefits of any hardship protections already in place.
“This ensures ongoing support for consumers experiencing vulnerability during what can already be a difficult and stressful time,” Mr Oliver said.
In addition to the infringement notice penalties, the AER has accepted a court enforceable undertaking from Red Energy requiring the company to review and improve its hardship policy, deliver staff training and implement new systems to ensure compliance with its hardship obligations.
The court enforceable undertaking also includes an admission by Red Energy that it breached its obligations by failing to offer payment plans and failing to implement its hardship policy.
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Notes to editors
Background
The alleged contraventions were referred to the AER by a financial counsellor after it received a complaint from a hardship customer of Red Energy.
National Energy Retail Law
The National Energy Retail Law (Retail Law) mandates that energy retailers must offer payment plans to customers experiencing hardship. These plans must consider the customer’s ability to pay, any existing debt, and their estimated future energy usage. Importantly, retailers cannot disconnect a customer in hardship who is complying with their payment plan, ensuring continued access to essential energy services during challenging times.
The AER alleged that Red Energy breached section 43(2)(c) and 50(1) of the Retail Law by failing to offer payment plans and failing to implement its hardship policy.
Infringement notices
The AER can issue an infringement notice where it has reasonable grounds to believe a person or business has contravened certain provisions of the Retail Law.
The payment of an infringement notice does not constitute an admission of liability by the person or business.
Court enforceable undertakings
The AER can accept a court enforceable undertaking from a regulated business in relation to any of our areas of responsibility under the national energy laws.
An enforceable undertaking might include commitments to undertake an audit or appoint an independent expert to ensure that the business has identified the root cause of the breach and the risk of future breaches is mitigated, or could contain commitments that relate to consumer redress (for example, debt waivers).
Compliance and enforcement priorities
Improving outcomes for customers experiencing vulnerability, including by improving retailer hardship policies and access to hardship and payment plan protections is one of the AER’s Compliance and Enforcement Priorities for 2024-25.
Protecting vulnerable consumers, while enabling consumers to participate in energy markets, is also one of the AER’s three enduring Compliance and Enforcement Priorities.
Learn more about the AER’s enduring and 2024-25 Compliance and Enforcement Priorities here.