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Cracking down on unfair energy bill penalties

27 February 2020

The Liberal National Government is protecting Australians from unfair penalties for not paying their gas and electricity bills on time.

New rules will start on 1 July 2020 that prevent energy retailers from excessively penalising people who sign up to discount offers, but fail to meet strict payment deadlines.

In response to the Australian Competition and Consumer Commission’s (ACCC) Retail Electricity Pricing Inquiry, which identified issues with the pay-on-time discounts offered by electricity retailers, Minister for Energy and Emissions Reduction Angus Taylor submitted the rule change request to the Australian Energy Market Commission (AEMC) in February 2019.

Minister Taylor said today’s final rule change determination by the AEMC ensures consumers will not be ripped off.

“We are protecting consumers from dodgy retailing practices, and making sure discount deals are fair and transparent,” he said.

“Our focus is lower electricity prices, making sure Australian consumers get the best possible deals on their energy and ensuring retailers put their customers first.”

The new rule change will better protect consumers by ensuring late payment fees and pay on-time discount conditions are limited only to a retailer’s reasonable costs.

The new rules will apply to both gas and electricity retail contracts entered into after 1 July 2020.

The Government urges consumers to continue to shop around for the best deals on gas and electricity, and to take note of the terms and conditions that come with special offers.

This Government’s introduction of the Default Market Offer (DMO) incentivised retailers to reduce the level of their conditional discounts meaning that consumers no longer face sneaky late payment fees of up to $1,000 depending on where they live.

But this practice is still having a significant impact on customers.   

Based on the ACCC’s most recent report on electricity prices, it is estimated that average residential customers who fail to meet the conditions to receive discounts could be penalised between up to $185 per year, and small businesses up to $845 per year.

The Government has directed the ACCC to continue to monitor electricity and gas prices in Australia to ensure that consumers are benefiting from action to bring prices down.

This rule change builds on the Government’s broader efforts to bring electricity prices down for Australian consumers, including:

  • The DMO, which puts a cap on the maximum price that retailers can charge their loyal customers on standing offers;
  • The Big Stick legislation, which holds retailers to account by forcing them to pass on lower costs to Australian consumers; and
  • Underwriting new generation investments that will get reliable, and low cost generation onto the grid and put further downward pressure on electricity prices.

Media contact: Minister Taylor’s office 02 6277 7120