Rules to help Victorians access affordable energy and tackle ‘loyalty tax' proposed by regulator

The Essential Services Commission is proposing new rules to require energy retailers to move certain customers onto cheaper plans. The commission estimates these rules would have saved customers an average of around $225 on electricity and $182 on their gas each year.

The proposed changes to the Energy Retail Code of Practice are designed to ensure customers experiencing financial hardship and those who have been on the same plan for over four years pay a fair price for their power.

Retailers would be required to move customers:

• receiving assistance under the Payment Difficulty Framework onto their cheapest plan
• in arrears for at least three months and with arrears above $1,000 onto their cheapest plan
• on contracts over four years old onto a reasonable price, considering their circumstances.

The commission has proposed a range of other rule changes designed to help customers access affordable energy plans and stay connected, including:

• requiring retailers to make it easier for customers to move to their cheapest plan
• prohibiting retailers from making a payment method like direct debit or a communication channel like e-billing a prerequisite for accessing a particular energy plan
• increasing the minimum debt a customer can be disconnected for from $300 to $500.

The commission has proposed the rule changes in response to a request from the Victorian Minister for Energy and Resources (alongside recommendations from the Energy and Climate Change Ministerial Council).

Feedback on the commission’s proposed changes to the Retail Code of Practice is welcome and can be submitted through Engage Victoria. The consultation period closes on 26 June 2025.

Our latest research report, Customers on older plans significantly better off on their retailer’s best offer, includes more analysis on the financial benefit of moving onto a retailer’s cheapest plan.

Quotes attributable to Essential Services Commission Chairperson and Commissioner Gerard Brody

“If an energy retailer is supporting someone in financial hardship, moving them onto the cheapest plan is a simple, considerate step they can take to help the customer. It’s contradictory to be helping someone in hardship while also charging them unnecessarily high rates.”

“We’re also proposing a new rule that aims to end the ‘loyalty tax’, which sees prices stay sharp for customers who compare deals but creep up for those who stay on the same plan. Energy retailers would be required to move customers that have been on the same plan for 4 years onto a more reasonable rate.”

“We know there are barriers that stop people shopping around in the complex energy market, but we don’t want those barriers to result in Victorians paying unnecessarily or unreasonably high rates.”

“The Essential Services Commission promotes the long-term interests of Victorian consumers with respect to price of essential services, and that’s exactly what these proposed changes aim to do.”

Background

The payment difficulty framework is a set of energy rules to better protect and support residential customers that are facing payment difficulty by:

• helping them avoid getting into debt with their retailer
• making it easier for them to pay for their ongoing energy use, repay debt when they have missed a bill and lower their energy costs
• ensuring they are only disconnected for non-payment of a bill as a measure of last resort.