We directed four retailers to appoint an independent reviewer to conduct a compliance review on payment difficulty framework obligations.
2024-25 compliance review - payment difficulty framework
- Scope of the review finalised
- Retailers directed to appoint independent reviewer
- Independent reviewers approved by commission
- Consultation meetings held with retailers and their independent reviewers
- Draft reports submitted
- Final reports submitted
- Findings published
Overview
Overview
In December 2024, the Essential Services Commission (the commission) directed 1st Energy Pty Ltd (1st Energy), AGL Sales Pty Ltd (AGL), Alinta Energy Retail Sales Pty Ltd (Alinta Energy) and Pacific Blue Retail Pty Ltd (Pacific Blue) to nominate an independent reviewer to conduct a compliance review (review) for the commission’s approval.
This review was part of our proactive compliance program aimed at identifying potential or actual non-compliance with Victoria’s Payment Difficulty Framework.
Review scope
The scope of the review required each retailer to demonstrate, with supporting evidence, that between 1 July 2023 and 30 September 2024, they adhered to the rules to assist customers anticipating or experiencing payment difficulty. This included:
- having effective processes in place to proactively identify customers experiencing payment difficulty
- offering tailored assistance and payment plans
- providing clear information about available support options
The review focused on each retailer's compliance with specific obligations under Part 6 of the commission’s Energy Retail Code of Practice. The objective of Part 6 is to set minimum standards of assistance to which residential customers anticipating or facing payment difficulties are entitled, so that disconnection of a residential customer for not paying a bill is a measure of last resort.
The scope also included:
- clauses 153 (family violence as a potential cause of payment difficulty), 185 (disconnection warning notices) and 187 (residential customer only to be disconnected as a last resort for non-payment) of the Energy Retail Code of Practice
- the Compliance and Performance Reporting Guideline (version 8) requirement that retailers must report potential or actual breaches of relevant provisions to the commission
As outlined below, the recommendations and findings reflect each independent reviewer and their individual reports. These findings do not represent the views of the commission.
Broad improvement opportunities
The below table summarises broad and general improvement opportunities that the independent reviewers identified from the reviews. These findings do not reflect the results of all the retailers that undertook the compliance review.
| Improvements | |
| Record keeping and training | Retailers should retain version and numbered control of key documents related to payment difficulty framework customers and processes. Checklists and other records should be stored appropriately. Training for relevant staff on appropriate record-keeping should be documented and undertaken. |
| Enhancing systems and processes | Systems and processes should be regularly reviewed to ensure compliance with Victorian energy laws and to identify and provide payment difficulty assistance to customers. Technology upgrades may assist with identifying customers who require assistance. |
| Contacting customers and information sharing | Customers must be contacted by retailers and proactively provided the information they are lawfully entitled to under energy rules. |
Independent reviewer findings
The respective independent reviewers found that 1st Energy, AGL and Alinta Energy had compliant processes and systems with the obligations specified within the scope of the review outlined in the Terms of Reference.
1st Energy
There was one improvement area identified for 1st Energy to implement (that was not a regulatory compliance issue). 1st Energy updated its document controls by improving version and numbering process, and improved document control approval and instruction processes.
AGL
AGL’s independent reviewer did not identify any instances of non-compliance or improvement opportunities.
Alinta Energy
Alinta Energy implemented the following improvements:
- enhancing and updating work instructions for staff interacting with customers anticipating or experiencing payment difficulty
- removing an erroneous eligibility criterion to access tailored assistance when customers had arrears less than $55 (including GST) which was not used in practice
- providing refresher training to staff on minimum assistance and disconnection notices
It also identified the following better practice areas for potential improvement (that are not regulatory compliance issues):
- implementing telephony upgrades for better call analytics capabilities
- upgrading systems to identify instances where customers are not provided with minimum assistance
Pacific Blue
Pacific Blue’s independent reviewer identified multiple instances of non-compliance including:
- reminder notices were not issued within the required 21 business days
- reminder notices were not put on hold for a customer when they should have been
- reminder notice content was insufficient (prior to January 2024 when updates were made)
- previous self-reported breaches occurred when Pacific Blue staff did not document payment plan assessments
- customers were only contacted about payment difficulty assistance through reminder notices and no other contact methods were attempted
- best endeavours were not used to provide payment difficulty assistance to customers with arrears
- disconnection checklist was not retained by Pacific Blue after raising disconnection service orders
Remediation of compliance issues
Following independent reviewers’ reports, 1st Energy and Pacific Blue submitted remediation plans to the commission based on each’s respective independent reviewers’ findings.
AGL did not submit a remediation plan as its independent reviewer did not find instances of non-compliance. Alinta Energy had implemented all of the independent reviewer’s compliance-related findings by the conclusion of the compliance review, so a remediation plan was not required.
Next steps
We will maintain oversight of retailers' adherence to their payment difficulty obligations under the Terms of Reference. We will also monitor 1st Energy’s and Pacific Blue’s implementation of their remediation plans and any breaches of Victoria’s energy laws in accordance with our compliance and enforcement priorities and compliance and enforcement policy. We will consider our compliance and enforcement tools with relevant retailers who do not adhere to their remediation plans (where applicable) or report breaches to the commission.