New dispute resolution and customer protection requirements for exempt energy sellers now in effect

The latest version of the Retail Exempt Selling Guideline released by the Australian Energy Regulator (AER) on 16 March 2018 introduces new customer protection and dispute resolution processes for customers of exempt energy sellers as conditions on their exemption, which means new and amended exemption conditions for exempt energy sellers to comply with from that date. Examples of such customers include tenants in shopping centres, or occupiers of units within a residential building, who purchase their energy from the shopping centre owner or the body corporate.

The AER's recent changes are further evidence of measures taken by the energy regulator to align the energy regulatory framework for exempt sellers with the energy regulatory framework for energy retailers under the National Energy Retail Law.

Who will these changes affect?

If you are an exempt seller of gas or electricity, a customer of an exempt seller or an energy ombudsman you will be impacted by these changes. If you are an exempt seller you will need to ensure your business has in place the necessary processes to meet these new customer protection requirements.

You are an exempt seller if you:

• have been granted an individual exemption by the AER under the Retail Law from the requirement to hold a retailer authorisation to sell energy; or
• fall within one of the registrable or deemed exemption classes set out in the Exempt Selling Guideline.

The new and amended core exemption conditions set out in the Exempt Selling Guideline apply to persons who are already exempt sellers under a deemed or registrable exemption as well as to persons who become exempt sellers under a deemed or registrable exemption after 16 March 2018.

Exempt sellers who sell only to large customers under registrable exemption class R5 will be, for the most part, unaffected by these changes. In addition, exempt sellers who hold an individual exemption will also be unaffected by these changes to the core exemption conditions for deemed and registrable exemptions, however for any persons seeking an individual exemption to on-sell energy through a retro-fitted embedded network, new information requirements have been introduced.

What are the key changes to the Guideline that you should know about?

New requirement for Exempt Sellers to develop Complaints and Dispute Resolution Procedures

A new core exemption condition has been introduced which requires exempt sellers to develop a set of procedures for handling customer complaints and disputes and to advise the customer at the start of the customer's tenancy/residency/agreement of these procedures. The dispute resolution procedures must be consistent with the Australian Standard AS/NZS 10002:2014 Guidelines for complaint management in organisations and the exempt seller must deal with any customer complaint or dispute in accordance with these complaints and dispute resolution procedures.

This condition applies to exempt sellers under a deemed or registrable exemption who sell to small business and residential customers and also includes government agencies selling energy to non-residential customers and persons selling energy in the provision of telecommunications services.

The requirement to develop a complaints and dispute resolution procedure does not apply in the case of exempt sellers who sell to large customers under registrable exemption class R5.

Exempt sellers selling to residential customers to be members of an Energy Ombudsman Scheme

A new requirement has been introduced for exempt sellers to obtain membership of, or be subject to, an energy ombudsman scheme, if permitted by that scheme, in the relevant jurisdiction where it sells energy to exempt customers and to comply with the requirements of that scheme.

This requirement only applies to exempt sellers who sell energy to residential customers under a deemed or registrable exemption.

Satisfying this requirement may be difficult to begin with, because until recently, most energy ombudsman schemes have been precluded from hearing complaints from customers of exempt sellers. The AER expressly acknowledges in the Exempt Selling Guideline that ombudsman schemes may need to amend their charters, constitutions or constituting legislation in order to allow exempt sellers to participate.

Further changes to align exemption conditions for exempt sellers with energy retailer obligations

Additional changes have been introduced to more closely align the core exemption conditions in the Exempt Selling Guideline with the obligations of authorised retailers under the Retail Law.

New and amended core conditions require an exempt seller to:

• inform any customer experiencing financial difficultly who has been offered a payment plan, of the duration of the plan and the amount and frequency of each instalment payable under the plan;
• in the case of planned interruptions to supply, notify each affected customer at least two business days before the interruption;
• in the case of an unplanned interruption, make available to customers information relating to the interruption within 30 minutes of the exempt seller being advised;
• include in any reminder warning notice and disconnection notice issued to a customer, the information specified in the Guideline; and
• reconnect a customer's premises where the requirements for customer reconnection or re-energisation set out in the Guideline are met.

These new requirements do not apply to exempt sellers who sell only to large customers or exempt sellers who hold an individual exemption.

Other notable changes

The AER has removed the right for an exempt seller to refuse to sell energy to an exempt customer where the customer owes money to the exempt seller.

Additional information requirements have been included for persons seeking an individual exemption to on-sell energy through a converted embedded network (ie. retrofitting) and amendments made to clarify that a customer's consent to a proposed network conversion is different to the explicit consent of the customer required to join the network. In this respect, a customer can agree to a proposed network conversion but be supplied by another retailer.

Several other minor drafting improvements and clarifications have also been made to the Exempt Selling Guideline.

What do you need to do?

As an exempt seller, you will need to implement measures to ensure your business is compliant with these new requirements.

New and existing exempt sellers (other than exempt sellers who sell only to large customers or exempt sellers who hold an individual exemption) will need to:

• establish a set of procedures for handling customer complaints and disputes and provide a copy of these procedures to new residential and small business customers;
• if permitted by the relevant energy ombudsman scheme, apply for membership of an energy ombudsman scheme in each jurisdiction where it sells to exempt customers (except this requirement will not apply in relation to exempt sellers who sell only to small business customers);
• update its notification processes to comply with the new notice requirements for supply interruptions; and
• update the information it provides to residential customers with respect to payment plan offers and information provided to customers in disconnection warning notices.

For those persons seeking an individual exemption to on-sell in a retrofitted network, you will need to comply with the additional information requirements set out in the Guideline for network conversions.

Want to read more about regulation of embedded networks?

Recent updates were also introduced to the AER's Network Exemption Guideline which we have summarised here.

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