Energy network rule change to protect retailers and customers

Ceyda Erem

Monday 01 June 2020

From relief packages to pausing repayments and to fee waivers, we’ve seen energy retailers launch a number of initiatives to help vulnerable households during the COVID-19 pandemic. 

But last week, the Australian Energy Market Commission (AEMC) announced it would be extending the same level of care toward electricity retailers by considering an urgent rule change, which would allow retailers to defer some of their network charges for six months. 

This has come after mounting network costs have threatened to put some retailers out of business. Such an event could hurt the national energy market (NEM), as it would reduce competition between retailers and a supply disruption for customers. 

If you weren't aware, in order for your home to be supplied with electricity, retailers must pay network service charges to electricity distributors. This cost is then passed onto customers and can account for up to 50% of your energy bill. 

“We know that retailers are facing increases in the level of non-paying and hardship customers while still paying for wholesale electricity and network access – which together make up nearly 80% of their costs,” said AMEC chair, John Pierce in a statement. 

“And they have been put on notice not to disconnect customers who are having trouble paying their bills because of COVID-19.” 

Pierce explained that should an energy retailer, big or small, go bust, a “domino effect” would ensue. 

“Some retailers are more financially healthy than others but if a large retailer or a number of smaller ones go out of business in a short space of time, this may have a domino effect on the others, who in turn will be under pressure to service larger numbers of hardship customers.”

Aussies applied for hardship by the thousands 

According to a recent AEMC inquiry, more than 20,000 electricity customers have registered for financial hardship plans since March, with customer requests for help clocking in at a rate of over 1,000 a week. 

These figures correlate with recent Mozo research, which found that 54% of Aussies predict they will need to apply financial hardship with their bank or energy provider within the next six months.

In that same survey, a massive 71% of respondents also revealed that this would be their first time having to apply for financial aid. 

If it’s your first time having to apply for financial assistance with your energy provider, our handy guide can help make the process stress-free. You can also find out what your retailer is doing specifically to help customers during COVID-19.

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