The Australian Energy Market Commission (AEMC) says it will be going ahead with a recently proposed rule change to assist struggling energy retailers.
At the start of June, Mozo reported on the (AEMC) announcement that it would be considering extending its relief support to energy retailers, as the rising number of customers deferring charges was causing financial strain.
Under the rule change, energy retailers are permitted to delay some of their network charges for up to six months in order to stay in business and prevent a supply disruption for customers.
According to the AEMC's acting chair, Merryn York, the decision will help prevent smaller players from shutting down and larger retailers from taking on more than they can manage.
“We want to avoid the domino effect of multiple retailers failing because this would put immense pressure on the remaining businesses to service larger numbers of customers unable to pay their bills during the pandemic,” York said. “This could reduce choice and increase prices.”
Energy rule change in detail
Under the new rules, retailers will have to pay electricity networks an annual interest rate of 3% on any deferred funds. This allows networks to recover the costs of allowing payment deferrals for up to six months.
“We want to keep competition strong because that is ultimately in the long-term interests of energy customers. A number of new retailers have entered the market in recent years, and we don’t want to see those competitive gains eroded,” said York.
Retailers must also continue to report the number of customers receiving financial support to the AEMC, which will then be passed onto the Australian Energy Regulator (AER).
Recent figures by the AER revealed in March, approximately 20,000 energy customers are now on payment plans due to the Covid-19 pandemic. And in July 2020, the total energy debt for households and small businesses combined, clocked in at a whopping $35.3 million.
If you believe you may need to apply for financial hardship with your energy retailer, find out how to get started by reading our handy guide.
You can also check out our financial assistance wrap up to learn more about what your retailer is doing to help vulnerable customers during the Covid-19 pandemic.