2 Energy Retail Market: 35 190 10 115 25 10 What will you FREE 50 25 20 350 2 8 99 16 May 2014
EnergyRetailMarket:AdditionalFeesandCharges Disclaimer The fee and bill calculations presented in this report should be used as a general guide only. The information presented in this report is not provided as financial advice. While we have taken great care to ensure accuracy of the information provided in this report, we do not accept any legal responsibility for errors or inaccuracies. The St Vincent de Paul Society and Alviss Consulting Pty Ltd do not acceptliabilityforanyactiontakenbasedontheinformationprovidedinthisreport or for any loss, economic or otherwise, suffered as a result of reliance on the informationpresented. EnergyRetailMarket:AdditionalFeesandCharges MayMausethJohnston,AlvissConsulting Melbourne,May2014 StVincentdePaulSocietyandAlvissConsultingPtyLtd Thisworkiscopyright.ApartfromanyusepermittedundertheCopyrightAct1968 (Ctw),nopartsmaybeadapted,reproduced,copied,stored,distributed,published or put to commercial use without prior written permission from the St Vincent de PaulSociety. Contact:GavinDufty Manager,SocialPolicyUnitVictoria Phone:(03)98955816or0439357129 StVincentdePaulSociety LockedBag4800,BoxHill,VIC3128 www.vinnies.org.au 1
EnergyRetailMarket:AdditionalFeesandCharges Tableofcontent Acknowledgements 2 ExecutiveSummary 3 1.Aboutthisproject 7 1.1Scopeandmethodology 7 2.Consumerimplicationsofadditionalfeesandcharges 9 3.Retailfeesandcharges 10 3.1EarlyTerminationFees 10 3.1.1Regulatoryprovisionsandjurisdictionaldifferences 10 3.1.2Thecostofearlyterminationfeestoconsumers 11 3.2LatePaymentFees 13 3.2.1Regulatoryprovisionsandjurisdictionaldifferences 14 3.2.2Thecostoflatepaymentfeestoconsumers 14 3.3DishonouredPaymentFees 15 3.3.1Regulatoryprovisionsandjurisdictionaldifferences 15 3.3.2Thecostofdishonouredpaymentfeestoconsumers 15 3.4PaymentProcessingFees 20 3.4.1Regulatoryprovisionsandjurisdictionaldifferences 20 3.4.2Thecostofpaymentprocessingfeestoconsumers 20 3.5Othercharges 21 3.6Networkrelatedservicecharges 23 3.6.1Regulatoryprovisionsandjurisdictionaldifferences 23 3.6.2Ambiguousretailerstatements 23 4.Regulatorymeasures 26 4.1Marketoffersvs.standingoffers/standardcontracts 26 4.2Disclosureregulationandretailerdisclosure 28 4.3Implicationsformarketcomparabilityandcompetition 32 4.4Betterregulation 32 5.Recommendations 35 Bibliography 36 2
EnergyRetailMarket:AdditionalFeesandCharges 3 Acknowledgements TheSocietyofStVincentdePaulVictoriaisgratefulforthefundingprovidedbythe NationalConsumerAdvocacyPaneltoundertakethisproject. Theviewsexpressedinthisdocumentdonotnecessarilyreflecttheviewsofthe ConsumerAdvocacyPanelortheAustralianEnergyMarketCommission.
EnergyRetailMarket:AdditionalFeesandCharges ExecutiveSummary Thisstudyintoretailers useofadditionalfeesandchargesinthenationalelectricity Market(NEM)hasfoundthat: Retailersimposevariousadditionalfeesandchargesonresidentialenergy customers.theseincludethebetter_knownfeessuchasearlyterminationfees andlatepaymentfees,aswellasthelesser_knowndishonouredpaymentfee, paymentprocessingfeeandaserviceoradministrationfeefornetwork_related services. Theamountschargedvarysignificantlyfromretailertoretailer,evenwhenthe feesrelatetotherecoveryofcostsincurredbytheretailers(suchasamerchant feeforprocessingcreditcardpaymentsorrejecteddirectdebitpayment). Manyretailersprovideambiguousinformationaboutwhatadditionalfeesand chargestheymayormaynotapply. Manyretailersdonotprovideinformationaboutsomefeesandchargespriorto afinalcontractbeingissued(thatisthelaststepinconsumers searchprocess). Oneretailerappearstomakeincorrectstatementsaboutcostsbeingapass throughfromthedistributionbusiness. Theconsumerproblem Additional fees and charges can make up a substantial proportion of many households energy costs, particularly for low consumption households. This is problematic in a reform environment based on demand side participation where consumersareexpectedtotakegreaterresponsibilitytoreducetheirenergycosts. Furthermore, additional fees and charges increase product complexity and the chanceofconsumersmakingpoordecisions.energycontractsarealreadycomplex productsasconsumersneedtounderstandtheirusageandneedswhencomparing offers. Additional fees and charges add another layer of complexity to this process and as some fees are linked to consumer behavior or future decisions (e.g. late paymentfeesandearlyterminationfees)itcanbealmostimpossibletodetermine what offers are most suitable in the long run. Linked to this, lack of market transparency and comparability impact on consumer confidence and market participation. This can cause consumer detriment in the longer term if it lessens competition. Finally,retailersmayrespondstrategicallyandchargeexcessiveand/orunfairfeesto thecostofconsumersanditisdifficult,aswellasresource_intensiveandcostly,to adequatelymonitorandenforcedisclosureregulation. 4
EnergyRetailMarket:AdditionalFeesandCharges Relyingondisclosureregulation We have assessed the various regulatory provisions that relate to retailer imposed fees and charges in the NEM. Both the national framework and jurisdictional regulation rely heavily on disclosure regulation when it comes to fees and charges beingimposedoncustomersinthecompetitiveretailmarkets.disclosureregulation requiresretailerstodiscloseallfeesandcharges,aswellasobtainexplicitinformed consentfromcustomersacceptingoffers. However, as documented in this report, disclosure regulation is more effective in theorythanpractise.retailersappeartobeunableorunwillingtoadequatelyinform consumers through accessible documents and this makes disclosure regulation ineffective.brokenweblinks,inaccurateorambiguouswording,inadequatelevelsof detail in the information provided etc. are issues the regulator needs to assess in order to ensure compliance. This is an enormous task considering the number of energyretailoffersavailable. Wehavetoaskwhatthebenefitofthisregulatoryapproachis?Thebenefitappears tobethatweallowenergyretailerstobeinnovativewhendecidingwhatadditional feesandchargestheycanapplywhilestillmanagingtoretainorattractcustomers. Wequestionwhetherthisbenefitoutweighsthecostofthisapproach. We believe that some of the fees and charges currently allowed for market offer contracts are simply legacy_fees from a time when regulators determined retail prices for the majority of residential customers. Regulators have to take various retailcostsintoaccountinordertodeterminewhattheappropriatepriceshouldbe. Assessingthecostofservicingisthuspartofthisprocessandretailerswouldhavean incentive to demonstrate all the additional costs they incur due to late payers, dishonoured payments, reminder notices etc. In today s market the majority of residential customers are on market contracts (although the numbers vary significantlyfromjurisdictiontojurisdiction),meaningthattheretailerssettheprice themselves. 1 Asaresultretailersarefreetofactorinthecostoflatepaymentfees, dishonouredpayments,remindernoticesetc.whendeterminingtheirownprice.in fact,removingtheuseofadditionalretailfeesandchargesmayimproveinnovation amongstretailersastheywouldhaveanincentivetofindmorecosteffectiveways tocommunicateandservetheircustomersinordertoprotectthebottomline. Betterregulation Weagreethatacompetitivemarketisthebestplaceforproductinnovationtooccur buttheimportantproductinnovationisinregardstotheenergycomponentofthe product rather than strategic earning potentials from additional fees and charges. 1 InSouthAustralia81%ofcustomersareonamarketcontract,75%inVictoria,60%inNSW,46%on Queensland(but70%inSouthEastQueensland)and19%intheACT.SeeAER,StateoftheEnergy Market2013,p126 5
EnergyRetailMarket:AdditionalFeesandCharges We believe there is a risk that when a regulatory framework allows for too much innovationthiscanresultinfirmslackingincentivestoinnovateintheareaswhere innovationismostneeded(i.e.tariffdesign,demandsideparticipation,newforms ofcustomercommunications). Inourview,betterregulationintheretailmarketwouldbeanapproachthatlimits, or simply bans, retailers from charging additional fees and charges. This type of regulationwouldallowenergyretailerstofocusontheirmainfunctionintheenergy supply chain, which is managing wholesale cost risks for end users and communicatingwiththeircustomers. Ifthereisnowillingnesstobanorlimittheuseofadditionalretailfeesandcharges we believe the regulatory framework that enforces and reports on the use of additional fees and charges in energy retail contracts needs strengthening. This would,however,beamorecostlyapproachcomparedtosimplybanningthem. 6
EnergyRetailMarket:AdditionalFeesandCharges 1.Aboutthisproject Thisprojectwaspartlyinspiredbytheongoingcourtcasesoverfeesinthebanking sector. 2 In February 2014 the Federal Court determined that late payment fees chargedinthebankingsector(bytheanzbank)werepenaltiesandthatconsumers shouldreceivecompensationiftheyhadbeenunfairlycharged. 3 Furthermore,the rulingstatesthatthefeeschargedbytheanzexceededthetruecosttothebank. 4 Although our focus is not on customer compensation we do believe this case is relevant to understand the complex task faced by regulators in assessing and ensuringthatfeesandchargesimposedbyenergyretailersarefairandreasonable. Thisprojectdocumentsandanalysestheapplicationoffeesandchargestoenergy retailcontractsandassessestheimpactsonresidentialconsumersinnsw,victoria, South Australia, Queensland, Tasmania and the ACT. The project has two key objectives: To document and analyse the fees and charges applicable to residential consumers in the National Electricity Market (NEM). This report discusses factors that influence the prevalence of fees and charges, their impacts on consumers,andpolicyandregulatoryresponsesthatcanreducetheiruse. Toincreaseconsumerawarenessofenergyfeesandcharges,andtoadvocate foranenergymarketwithminimaluseoffeesandcharges. 1.1Scopeandmethodology Theanalysisanddiscussionpresentedinthisreportfocusesonadditionalretailfees andcharges.byadditionalwemeanfeesandchargesthatarenotcollectedthrough thedailysupplychargeortheconsumptioncharge(e.g.centsperkwh).byretailwe mean fees and charges that are retail revenue and we therefore exclude network costs(suchasconnection/disconnectioncharges,meterreadsetc.)andgovernment charges(e.g.gst).thatsaid,itisnotalwayseasytodeterminewhetherthereisa retail revenue component attached to a charge or how large the proportion is. In termsofnetworkchargestheretailersmayincludeaservice/administrationfeefor marketoffercontractswithoutstipulatingtheexactamount.inrelationtopayment processingfeesanddishonouredpaymentfeestheretailermayincuramerchantfee or a penalty fee from the relevant financial institution, and either pass these costs through to its customers or add a surcharge to the cost it incurs. These aspects of retailfeesareconsideredinthisreport. 2 See,forexample,ABCNews,ANZclassaction:38,000customerstakebanktoFederalCourtover feesbyamybainbridge,2december2013 3 MauriceBlackburnLawyers,BankingrevolutionbeginswithlandmarkFederalCourtruling,Press ReleasesandAnnouncements,5February2014 4 PacioccovAustraliaandNewZealandBankingGroupLimited[2014]FCA35 7
EnergyRetailMarket:AdditionalFeesandCharges The report focuses on residential electricity contracts but as the regulatory framework typically applies to gas as well (Queensland being an exemption) the findingspresentedandissuesraisedarerelevantforresidentialgascustomerstoo. The regulatory frameworks considered by this report are the National Energy Customer Framework (NECF) that covers the ACT, South Australia, NSW and Tasmania,theVictorianRetailCodeandQueensland selectricitycode.thefindings and issues raised are thus relevant to residential energy customers in the National ElectricityMarket(NEM).However,aswehavedocumentedandanalysedadditional fees and charges that apply to retailers market offers, and the only electricity marketoffercurrentlyavailableintasmaniaisaprepaymentproduct,wehavenot includedanytasmanianoffersinthisanalysis. Tocollectinformationaboutretailers additionalfeesandchargeswehaveassessed publicly available information only. Such information sources include Energy Price Fact Sheets (or Price and Product Information Statements), Customer Charters, ContractTermsandConditionsaswellasonlineinformationaboutfeesandcharges. The intention has thus been to assess and compare information available to consumers attempting to compare various market offers rather than assessing the information provided (and the level of regulatory compliance) in a final contract betweenaretaileranditscustomer.thisisanimportantdistinctiontonoteassome oftheregulatoryprovisionsstipulatethattheretailermustdisclosefeesandcharges inthecontractonly. Inordertocompareandcalculatethecostofthesefeesandchargestohouseholds (in section 3), we have used published electricity market offers as of January 2014 forvictoria,andjuly2013fortheotherjurisdictions. 8
EnergyRetailMarket:AdditionalFeesandCharges 2.Consumerimplicationsofadditionalfeesandcharges Additional fees and charges applied to energy contracts can cause consumer detrimentforfourreasons: 1) Additional fees and charges can make up a substantial proportion of many households energy costs, particularly for low consumption households. This is problematic in a reform environment based on demand side participation where consumersareexpectedtotakegreaterresponsibilitytoreducetheirenergycosts. Additionalfeesandchargesareacostcomponentconsumersareunabletorespond to (by reducing/shifting demand) and the more retailers impose such charges the moredifficultitwillbetoavoidthem. 2) Additional fees and charges increase product complexity and the chance of consumersmakingpoordecisions.energycontractsarealreadycomplexproductsas consumers need to understand their usage and needs when comparing offers. Additionalfeesandchargesaddanotherlayerofcomplexitytothisprocessandas some fees are linked to consumer behavior or future decisions (e.g. late payment fees and early termination fees) it can be almost impossible to determine what offersaremostsuitableinthelongrun. 3) Linked to the above, lack of market transparency and comparability impact on consumerconfidenceandmarketparticipation.thiscancauseconsumerdetriment inthelongertermifitlessenscompetition. 4)Retailersmayseektochargeexcessiveand/orunfairfeestothecostofconsumers and it is difficult, as well as costly, to adequately monitor and enforce disclosure regulation.householdsarethereforelikelytoenduppayinginonewayoranother. 9
EnergyRetailMarket:AdditionalFeesandCharges 3.Retailfeesandcharges Thisreportfocusesonadditionalfeesandchargesappliedbytheelectricityretailers. Asconsumerabilitytocompareretailoffersispivotaltoacompetitivemarket,the use, as well as disclosure, of additional fees and charges in the electricity retail market is a key issue of concern. The network businesses apply various fees and charges as well, but as they are regulated monopolies we believe the market implicationsofthosefeesandchargesarelessproblematic. 3.1Earlyterminationfees An early termination fee (ETF) is a fee charged to customers if they decide to terminateafixedtermcontract.etfshavebeensubjecttosubstantialdebate,both intermsofthesizeofthefeeaswellasitsapplicationtocontractswhereretailers canfreelyadjusttheprice. 5 3.1.1Regulatoryprovisionsandjurisdictionaldifferences InVictoria,aretailermayimposeanETFif theirenergycontractincludesdetailsof the amount or manner of calculating the early termination fee. 6 The Victorian EnergyRetailCodestipulatesthat20(excludingGST)istheappropriateamountto recover: theadditionalcostsofgivingeffecttotheearlyterminationofthecontract, finalbillingandceasingtoberesponsibleforthesupplyaddress;and thevalueofanyimbalanceintheretailer selectricityorgashedgingprogram totheextentthatitisdirectlyattributabletothatbreachofcontract. 7 However,theCodealsoallowsretailerstorecoverthe pro_ratacostsofprocuring the customer to enter into the contract. 8 As such, Victorian retailers may charge morethan20iftheydemonstratethepro_ratacostofcontractincentivessuchasa welcomecredit orgiftuponcontractcommencement. InQueensland,customersareexemptfrompayinganETFiftheretailerincreasesthe marketelectricityratesabovetheregulatedrates. 9 Under the NECF, which currently applies to customers in the ACT, NSW, South AustraliaandTasmania,retailerscanapplyanETFtofixedperiodcontractsbutthe 5 See,forexample,GavinDuftyandMayMausethJohnston,TheNationalEnergyMarket inabitofa state?,november2012,consumeractionlawcentreandconsumerutilitiesadvocacycentre, UnilateralPriceVariation&MarketRetailContracts RulechangerequestfortheAustralianEnergy MarketCommission,October2013andIPART,EarlyTerminationFees Regulatingthefeeschargedto smallelectricityconsumersinnsw,finaldecision,december2013. 6 VictorianEnergyRetailCode,Clause24.1(d) 7 VictorianEnergyRetailCode,Clause31(c) 8 VictorianEnergyRetailCode,Clause31(c) 9 Seehttp://www.dews.qld.gov.au/energy_water_home/electricity/prices/contracts 10
EnergyRetailMarket:AdditionalFeesandCharges feemustbeareasonableestimateofthecostsfacedbytheretailerduetoanearly terminationofcontract. 10 In NSW, however, the Independent Pricing and Regulatory Tribunal (IPART) introducedamaximumcaponetfsindecember2013(notethatthefeescollected andusedfortheanalysisinthisreportareasofjuly2013). 11 Thecapissetat130 forcustomersterminatingwithin12monthsofsigningupand45iftheyterminate thereafter. The regulatory provisions regarding ETFs thus vary significantly between jurisdictions. In Queensland, the appropriateness of applying ETFs depends on the retailers price increases. The NSW regulator believes fees as high as 130 may be warranted while the Victorian regulator deems that 20 (with exemptions) is an appropriateamount.thenecf,ontheotherhand,doesnotprovideanyindication ofwhattheappropriateamountwouldbe. 3.1.2Thecostofearlyterminationfeestoconsumers Chart 1 below shows that the size of the ETF varies significantly between jurisdictions, as well as retailers. 12 While the majority of the contracts charge between50_100ifthecustomerterminatesthecontractwithinthefirst12months, there are also exceptions such as Red Energy s contract in NSW, which charges an earlyterminationfeeof195. 13 ActewAGL sfeeintheactcaneasilybecomethe most expensive contract to terminate. As ActewAGL s offer is a bundling product (discounted electricity if the customer also signs up for other services such as telephone,internetetc)andtheetfis50perproduct/service,acustomercanbe charged up to 350 if terminating a contract that includes the bundling of seven products/services. 14 Itshouldalsobenotedthatsomeretailerschoosenottoapply ETFsand/orstipulateafixedtermfortheircontracts. 10 NationalEnergyRetailRules49(A) 11 IPART,Mediarelease,FinalReportonearlyterminationfeesforelectricitycontractsforsmall customers,16december2013 12 Thesearethemaximumearlyterminationfeesappliedbytheretailerifthecustomerterminates thecontractwithinthefirst12months.basedonpublishedelectricitymarketoffersasofjuly2013 and,forvictoria,january2014. 13 NotethatthesefeesarebasedonmarketcontractsasofJuly2013andthuspriortoIPARTs decisionregardingmaximumetfs. 14 Theminimumoptionistobundlethreeservices(inexchangefora3%discountontheelectricity bill)andthiscontractoptionwouldthuscontainanearlyterminationfeeof150 11
EnergyRetailMarket:AdditionalFeesandCharges Chart1Feechargedforearlyterminationofmarketoffercontract EarlyTerminationFee() 0 50 100 150 200 250 300 350 400 ACTActewAGL NSWRed SARed SASimply ACTEA NSWEA QLDEA SAEA NSWQenergy SAQenergy VICLumo VICSimply NSWAGL NSWMomentum NSWLumo QLDAGL SAAGL SALumo VICAGL NSWOrigin QLDOrigin SAOrigin VICN'hood NSWPowerdirect QLDPowerdirect SAPowerdirect VICOrigin VICEA VICPeople VICQenergy VICRed VICPowerdirect VICMomentum AssomeofthefeesappliedtoVictorianconsumersare well above the 22 (including GST) stipulated in the Code, we can only assume that retailers such as AGL, SimplyandLumoneededtorecoverincentivepayments or gifts associated with these offers. That said, retailers may also over_charge customers. Australian Power and Gas(acquired by AGL in October 2013) was ordered by the Essential Services Commission (ESC) to reimburse over 754,000 that they had unlawfully collected throughexcessetfsfrom11,610customers. 15 Australian PowerandGasexplainedthattheoverchargingoccurred AustralianPowerand Gas wasorderedbythe EssentialServices Commission(ESC)to reimburseover754,000 thattheyhadunlawfully collectedthroughexcess ETFsfrom11,610 customers 15 HeraldSun,FormerAustralianPower&GascustomersowedrefundsinpowerblunderbyKaren Collier,12January2014 12
EnergyRetailMarket:AdditionalFeesandCharges becauseof anerrorregardingtheinterpretationofallowablecharges. 16 Potential improvements to the regulatory measures in order to limit the risk of retailers overchargingarediscussedinsection4below. RedEnergy setfinnswequatesto10%oftheannualbill that an average consumption household on this contract wouldreceive. 17 EnergyAustralia s(ea)etfwouldequateto 5% of a typical customer s annual bill in the ACT. 18 In Queensland,NSWandSouthAustralia,thesameETFwould equate to 3.9%, 4.2% and 3.9% of a typical annual bill respectively. 19 In Victoria, where Energy Australia s ETFis 22 (compared to 90 in the other jurisdictions), the fee would equate to 1.7% of the annual bill for a typical consumptionmelbournehousehold. 20 3.2Latepaymentfees RedEnergy setfin NSWequatesto 10%oftheannual billthatanaverage consumption householdonthis contractwould receive Customersmaybechargedalatepaymentfeeiftheyhavenotpaidtheirbillbythe duedate.theargumentsforandagainstlatepaymentfeesaremanyandithasbeen extensively debated in NSW where IPART determines the fee for standard contracts/standing offers. During IPART s review of regulated retail tariffs and chargesforelectricity2010_2013retailersarguedthatthecurrentfee(7)wastoo lowcomparedtothecostsincurredbyretailerswhileconsumergroupsraisedthat latepaymentfeesfurtherpenalisedhouseholdsalreadystrugglingtopaytheirbills. 21 In its decision, IPART argued that late payment fees are needed to incentivise customerstopaytheirbillsontime: Wedecidednottosetthelatepaymentfeeatzerobecauseinourview,this approachhasthepotentialtoleadtohigherlatepaymentcosts.theabsence ofalatepaymentfeewouldreducetheincentiveforsmallcustomerstopay theirbillsontime,andthereforecouldresultinretailershavingtosendmore 16 Ibid. 17 Basedonanannualconsumptionof7,200kWh(singlerateinAusgrid snetworkarea)producingan annualbillofapproximately1,955(asofjuly2013,includesmarketofferdiscountandpayontime discount). 18 Basedonanannualconsumptionof8,000kWh(singlerate)producinganannualbillof approximately1,780(asofjuly2013,includesmarketofferdiscount/payontimediscount). 19 Queenslandisbasedonanannualconsumptionof8,000kWh(singlerate)producinganannualbill ofapproximately2,325(asofjuly2013),nswisbasedonanannualconsumptionof7,200kwh (singlerateinausgrid snetworkarea)producinganannualbillofapproximately2,115(asofjuly 2013)andSouthAustraliaisbasedonanannualconsumptionof6,000kWh(singlerate)producingan annualbillofapproximately2,280(asofjuly2013). 20 Basedonanannualconsumptionof4,800kWh(singlerateinCitipower snetworkarea)producing anannualbillofapproximately1,325(asofjanuary2014) 21 IPART,Reviewofregulatedretailtariffsandchargesforelectricity2010T2013,Finalreport,March 2010 13
EnergyRetailMarket:AdditionalFeesandCharges reminder notices, experiencing longer delays between billing and payment, andforegoingmoreinterest. 22 TheStVincentdePaulSocietyhasobservedthatlatepaymentfeescombinedwith payontimediscountsmeansthatnswhouseholdscanbesignificantlypenalisedfor late payment. Or conversely, NSW households can be significantly rewarded for prompt payment. It does, however, highlight an issue that negatively impacts on householdswithcash_flowproblems. 23 3.2.1Regulatoryprovisionsandjurisdictionaldifferences In Victoria, The Electricity Industry Act prohibits the use of late payment fees for smallcustomercontracts. 24 Queensland has a similar regulatory arrangement to that of Victoria for standard contract/standing offers, but retailers can, and do, charge late payment fees for marketcontracts. UndertheNECF,latepaymentfeesmaybeimposedonbothmarketoffercontracts andstandard/standingoffercontracts.thenationalenergyretaillawstates: (1)Aretailermayimposeafeeforlatepaymentofabillforacustomerretail service. (2)However,iftheserviceisprovidedunderacustomerretailcontractwitha smallcustomer (a) the fee must not exceed the reasonable costs of the retailer in recoveringanoverdueamount;and (b)ifthecustomerlodgesacomplaintinrelationtothebillunderpart 4oftheNationalEnergyRetailLaw(SouthAustralia),theretailermust nottakestepstorecoverafeeforlatepaymentwhilethecomplaintis beingdealtwithunderthatpart. 25 3.2.2ThecostofLatePaymentFeestoconsumers Chart 2 below shows that the majority of 2 nd tier retailers do not charge late paymentfeesbutitshouldbenotedthatsomeretailersareunclearwhethertheydo ornot. 26 ActewAGL,intheACT,hasthehighestlatepenaltyfeeat16whileother retailerschargebetween12and14. 22 Ibid,p194 23 StVincentdePaulSociety,NewSouthWalesEnergyPricesJuly2011 July2012,AnUpdatereport onthenswtariffttrackingprojectbymaymausethjohnston,august2012 24 ElectricityIndustryAct2000,Clause40c 25 NationalEnergyRetailLaw,Clause24 26 See,forexample,SimplyEnergy,SmallCustomerMarketRetailContractTermsandPrivacyPolicy 14
EnergyRetailMarket:AdditionalFeesandCharges Chart2Feechargedforlatepaymentofbill(marketoffers) LatePaymentFee() 18 16 14 12 10 8 6 4 2 0 The16feechargedbyActewAGLintheACTwouldtypically equate to approximately 3.5% of a customer s quarterly electricity bill. 27 For a Queensland customer on Origin s marketoffer,ontheotherhand,thelatepaymentfeewould typically equate to 0.5% of the quarterly bill. 28 That said, Origin s market offer also includes a pay on time discount thatthecustomerforegoeswhenpayinglate.thequarterly valueofthepayontimediscountforatypicalconsumption household in Queensland on this Origin offer is approximately 10 and a late payment fee of 22 (the valueofthepayontimediscountandthelatepaymentfee The16fee chargedby ActewAGLinthe ACTwouldtypically equateto approximately3.5% ofacustomer s quarterlyelectricity bill combined) means that the fee equates to approximately 3.5% of customers quarterlybill(thesameproportionastheact). 29 InNSW,wheretypicalelectricity consumptionissomewhatlowercomparedtotheactandqueensland,acustomer onorigin smarketofferwouldtypicallypayalatepaymentfeethatequatesto2.3% of the quarterly bill (or 4% if we include the foregone value of the pay on time discount). 30 27 Basedonanannualconsumptionof8,000kWh(singlerate)producinganannualbillof approximately1,880(asofjuly2013). 28 Basedonanannualconsumptionof8,000kWh(singlerate)producinganannualbillof approximately2,463(asofjuly2013andincludesmarketofferdiscountbutnotpayontime discount). 29 Ibid. 30 Basedonanannualconsumptionof7,200kWh(singlerateinAusgrid snetworkarea)producingan annualbillofapproximately2,066(asofjuly2013andincludesmarketofferdiscountbutnotpayon timediscount).thequarterlyvalueofthepayontimediscountisapproximately11. 15
EnergyRetailMarket:AdditionalFeesandCharges 3.3Dishonouredpaymentfees Customers may be charged dishonoured payment fees when there are insufficient funds to cover payments by cheque, direct debit or credit card. In the NSW price reviewin2010ipartrecommendedthatdishonouredchequefeesshouldcontinue tobetwicetheamountchargedbythefinancialinstitutionsandthatadishonoured payment fee should be allowed for non_cheque payment methods (due to the declineinchequepaymentsandriseindirectdebit). 31 Industry(EnergyAustralia) proposed that retailers should be allowed to charge twice the amount of the financial institution s fee for dishonoured direct debit payments but IPART noted that [i]t is not necessarily appropriate to apply the same fee as for dishonoured chequestonon_chequepayments. 32 3.3.1Regulatoryprovisionsandjurisdictionaldifferences InVictoria,aretailermayrecoverafinancialinstitution sdishonouredpaymentfee and they may also charge more than the amount recovered under an agreed damages term. 33 This clause applies to both standing offer and market offer contracts. InQueensland,theCodestipulatesthattheamountchargedasanadditionalfeefor marketoffercontracts mustbefairandreasonablehavingregardtorelatedcosts incurredbytheretailentity. 34 The NECF also allows for retailers to charge dishonored payment fees as long as thesefeesaredisclosedinthemarketcontract. 35 Furthermore,theNationalEnergy Retail Law tasks the AER to develop and maintain guidelines for how the retailers shouldinformcustomersaboutadditionalfeesandcharges. 36 TheNECFdoesnot allow retailers to charge standard contract/standing offer customers dishonored paymentfees. 3.3.2Thecostofdishonouredpaymentfeestoconsumers Theideabehindallowingretailerstochargedishonouredpaymentfeesisofcourse toletthemrecoverthecostsincurreddirectlyfromindividualconsumersratherthan through energy prices applied to the entire customer base. However the amount chargedvariessignificantlyfromretailertoretaileranditisdifficulttobelievethat entitiessuchasaustraliapostwouldvarytheirdishonouredchequefeefromretailer toretailer(seechart5below). 31 IPART,Reviewofregulatedretailtariffsandchargesforelectricity2010T2013,Finalreport,March 2010 32 Ibid,p196 33 VictorianEnergyRetailCode,Clause7.5(a) 34 QueenslandElectricityIndustryCodeVersion14,Clause4.13.5(b) 35 NationalEnergyRetailRules46(2) 36AER,RetailPricingInformationGuideline,Version3,June2012 16
EnergyRetailMarket:AdditionalFeesandCharges Furthermore, the disclosure of dishonoured payment fees varies significantly betweenretailersandretailersabsentfromthechartsbelowshouldnotnecessarily beinterpretedasretailersnotimposingdishonouredpaymentfees. 37 Theissueof inadequatedisclosureisdiscussedinsection4. Asmoreandmoreretailersofferadditionaldiscountsforcustomerspayingtheirbills on time and/or by direct debit, the direct debit rejection fee is increasingly important. Chart3belowshowsthatthisfeevariesfromunder3tomorethan14,depending ontheretailer.interestingly,agl sdirectdebitrejectionfeeisalotlowerinsouth Australia (where AGL is the only incumbent electricity retailer) compared to other jurisdictions.the14.85feechargedbyqenergyinvictoriawouldtypicallyequate toapproximately4.6%ofacustomer squarterlyelectricitybill. 38 Chart3Feechargedforrejecteddirectdebitpayment(marketoffers) NSWQenergy SAQenergy VICQenergy NSWDodo QldDodo VICDodo ACTActewAGL NSWAGL QLDAGL VICAGL NSWPowerdirect QLDPowerdirect SAPowerdirect VICPowerdirect NSWRed SARed VICRed VICPeople SAAGL DirectDebitRejectionFee() 0 2 4 6 8 10 12 14 16 Chart4belowshowsdishonouredchequefeesthatvaryfromapproximately5to 36,dependingontheretailer.The36feechargedbyActewAGLintheACTwould 37 Wealsonotethatnotallretailersallowcustomerstouseallthesepaymentmethodsandthe dishonoredpaymentfeethusmaynotbeapplicable. 38 Basedonanannualconsumptionof4,800kWh(singlerate)inCitipower snetworkareaproducing anannualbillofapproximately1,304(asofjanuary2014). 17
EnergyRetailMarket:AdditionalFeesandCharges typically equate to approximately 7.6% of a customer s quarterly electricity bill. 39 Furthermore,ifPowerdirect sdishonouredchequefeeiscostreflectiveat5.50this would mean that ActewAGL potentially earns over 30 for each dishonoured cheque. Chart4Feechargedfordishonouredchequepayment(marketoffers) DishonouredChequeFee() 0 5 10 15 20 25 30 35 40 ACTActewAGL VICPeople NSWRed SARed VICRed NSWAGL QLDAGL VICAGL SAOrigin NSWQenergy SAQenergy VICQenergy NSWDodo QldDodo SAAGL VICDodo NSWPowerdirect QLDPowerdirect SAPowerdirect VICPowerdirect Chart 5 below shows fees for dishonoured Australia Post cheques. Again the amount varies significantly between retailers, from approximately 10 to 25. The 25 fee chargedbypeopleenergyinvictoriawouldtypicallyequate to approximately 7.8% of a customer s quarterly electricity bill. 40 [I]fPowerdirect s dishonouredcheque feeiscostreflective at5.50thiswould meanthatactewagl potentiallyearns over30foreach dishonouredcheque 39 Basedonanannualconsumptionof8,000kWh(singlerate)producinganannualbillof approximately1,880(asofjuly2013). 40 Basedonanannualconsumptionof4,800kWh(singlerate)inCitipower snetworkareaproducing anannualbillofapproximately1,304(asofjanuary2014) 18
EnergyRetailMarket:AdditionalFeesandCharges Chart5FeechargedfordishonouredAustralianPostchequepayment(marketoffers) VICPeople NSWOrigin QLDOrigin VICOrigin NSWPowerdirect QLDPowerdirect SAPowerdirect VICPowerdirect NSWDodo QldDodo VICDodo Chart6belowshowsfeesforrejectedcreditcardpaymentsandActewAGLisagain the retailer that applies the highest fee at 36 (which would typically equate to approximately7.6%ofacustomer squarterlyelectricitybill). 41 Chart6Feechargedforrejectedcreditcardpayment(marketoffers) ACTActewAGL NSWDodo QldDodo VICDodo NSWRed SARed VICRed VICPeople 41 Basedonanannualconsumptionof8,000kWh(singlerate)producinganannualbillof approximately1,880(asofjuly2013). DishonouredAustralianPostChequeFee() 0 5 10 15 20 25 30 DishonouredCreditCardFee() 0 5 10 15 20 25 30 35 40 19
EnergyRetailMarket:AdditionalFeesandCharges 3.4Paymentprocessingfees Themostcommontypeofpaymentprocessingfeeisacredit/debitcardprocessing fee and it is being justified by the merchant fee retailers are charged when their customers use this payment method. Dodo is one retailer that does not charge a creditcardprocessingfeebutdoeschargetoprocessanyotherformofpayment. 42 Dodochargesthecustomer1.90perpaymentiftheychosetoBpay,paybydirect debitorcheque.ifacustomerpaysdodousinganaustraliapostchequethefeeis 2.20. 3.4.1Regulatoryprovisionsandjurisdictionaldifferences InVictoria,aretailermayonlyrecoveramerchantservicefeethroughaprocessing feeifthecustomerisonamarketcontract. 43 Similarly in Queensland, the Code stipulates that the amount charged as an additionalfeeformarketoffercontracts mustbefairandreasonablehavingregard torelatedcostsincurredbytheretailentity. 44 TheNECFalsoallowsforretailerstochargepaymentprocessingfeesaslongasthese feesaredisclosedinthemarketcontract. 45 TheNationalEnergyRetailLaw,tasksthe AER to develop and maintain guidelines for how the retailers should inform customersaboutadditionalfeesandcharges. 46 TheNECFdoesnotallowretailersto chargepaymentprocessingfeesforstandard/standingoffercontracts. 47 3.4.2Thecostofpaymentprocessingfeestoconsumers Retailers will typically pay a merchant fee for credit/debit card transactions and whileweunderstandthatsomeretailersmaybeabletonegotiateabetterfeethan others (with lower processing numbers), we would question the differences we currentlyseeinregardstosomeretailers fees.electricitybillsareoftensubstantial andaprocessingfeeashighas1.7%canresultinasignificantadditionalcosttothe consumer. Chart 7 below shows that the majority of retailers charge a 0.6% credit/debitcardprocessingfee,whileotherscharge0.75%,1%and1.7%.againwe notethatthedisclosureofthesefeesisoftenunclearandthataretailer sabsence fromthischartdoesnotnecessarilymeanthatitdoesnotchargeaprocessingfee. 42 DodowasacquiredbytheM2GroupinMay2013 43 VictorianEnergyRetailCode,Clause7.5(b) 44 QueenslandElectricityIndustryCodeVersion14,Clause4.13.5(b) 45 NationalEnergyRetailRules46(2) 46AER,RetailPricingInformationGuideline,Version3,June2012 47NationalEnergyRetailRules32 20
EnergyRetailMarket:AdditionalFeesandCharges Chart7Feechargedforprocessingcreditcardpayment(marketoffers) NSWQenergy SAQenergy VICQenergy VICPeople NSWPowerdirect QLDPowerdirect SAPowerdirect VICPowerdirect VICSimply VICOrigin VICAGL SASimply SAOrigin SAAGL QLDOrigin QLDAGL NSWOrigin NSWAGL QEnergyistheretailerthathasthehighestdisclosedprocessingfeeforcreditcard payments (1.7%). In contrast Origin, AGL and Simply charge 0.6%. Average consumption QEnergy customers in NSW will typically pay just under 10 for a quarterlybillinprocessingfeesiftheychoosetopaybycredit/debitcard. 48 Onthe other hand, an AGL customer with the same consumption level would pay a credit card processing fee of just under 3. 49 If we assume that 0.6% reflects a typical merchant fee, QEnergy could potentially earn 7 for each customer paymentreceivedbycreditordebitcard. 3.5Othercharges CreditCardProcessingFee(%ofamountpaid) 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% AverageconsumptionQEnergy customersinnswwilltypicallypayjust under10foraquarterlybillin processingfeesiftheychoosetopayby credit/debitcard Thepreviouslycommonaccountestablishmentfeeisbecomingrareincompetitive retail markets. Clearly account establishment fees are difficult to sell in markets where retailers compete for customers to sign_up. ActewAGL in the ACT, however, still charges approximately 35 to establish a new customer account. In South Australia,AGL(thehostretailer)chargesjustover41foraccountestablishment. 48 Basedonanannualconsumptionof7,200kWh(singlerateinAusgrid snetworkarea)producingan annualbillofapproximately2,310(asofjuly2013andincludesmarketofferdiscount/payontime discount). 49 Basedonanannualconsumptionof7,200kWh(singlerateinAusgrid snetworkarea)producingan annualbillofapproximately1,945(asofjuly2013andincludesmarketofferdiscount/payontime discount). 21
EnergyRetailMarket:AdditionalFeesandCharges Anewertypeoffee,introducedbyDodo,istheprintedbillfee.Asenergyretailingis becoming more of an online business, Dodo decided to charge customers 2.20 to receiveaprintedbill. The more fees retailers introduce and the more they differentiate themselves from others by applying different fees or using different terminology, the more difficult it will be for consumers to accurately compare energy offers. A Texan study demonstrates just how inventive retailers can be in regards to introducing additionalfeesandchargesifallowedtobytheregulatoryframework. 50 Inaddition to the fees commonly used in Australian retail markets, i.e. early termination fee, late payment fee, payment processing fee and dishonoured payment fee, Texan consumersmayalsobechargedthefollowingretailfees: 51 Aminimumusagefee(ifconsumptionisbelowasetamount) Agentassistfee Documentprocessingfee Summarybillfee Move_outdatechangefee Expeditedreconnectionfee Paymentplanprocessingfee Paymentsoverphonefee Prioritymove_infee Reconnectaftertamperingfee Meterre_readfee Agentassistedpaymentfee E_billingdiscountforfeiturefee Servicechargeperbill Excessivenumberofpaymentstoaccountfee Creditapplicationreviewfee Furthermore,thestudyfoundthatmoreTexanretailerswerechargingmorefeesin 2013 compared to two years earlier and that the fees themselves had gone up. Australian energy retail markets becoming subject to fee_creep is thus a real concern. 50 CarolBiedrzycki,TexasElectricityConsumers,BewareofREPFees,TexasRatepayers Organization tosaveenergy,august2013 51 Ibid. Australianenergyretail marketsbecoming subjectto fee_creep is thusarealconcern 22
EnergyRetailMarket:AdditionalFeesandCharges 3.6Networkrelatedservicecharges Theleasttransparentretailchargesofthemallaresocallednetworkservicecharges or an administration fee. These charges are retail fees added on to the amount networks charge customers (through their retailers) for network services. As network charges are recovered through retail bills, it is almost impossible for a customertoknowwhetherthereareadditionalretailchargesattachedtoanetwork service(e.g.re_connection,disconnection,specialmeterreadetc.)letalonethesize oftheretailer sfee. 3.6.1Regulatoryprovisionsandjurisdictionaldifferences InVictoriaretailersmayimposeadditional fees and charges as long as the contract type is a market contract and the amountofanyadditionalretailchargeis fair and reasonable, and have regard to therelatedcostincurredbytheretailer. 52 InQueenslandretailersarenotallowedtochargestandardcontract/standingoffer customers additional service fees, but they can apply these to market offer contracts.thecodestipulates: Ifasmallcustomerisonastandardretailcontract,aretailentitymustnot chargethesmallcustomeranyadministrationfeesorsurchargewithrespect todistributionnontnetworkcharges. 53 Similarly,theNECFallowsforretailerstochargeadditionalfeesaslongasthesefees aredisclosedinthemarketcontract. 54 TheNationalEnergyRetailLaw,taskstheAER to develop and maintain guidelines for how the retailers should inform customers aboutadditionalfeesandcharges. 55 3.6.2Ambiguousretailerstatements Due to the lack of transparent disclosure and ambiguous retailer statements in regards to these charges, we were unable to estimate the cost to consumers in a meaningful manner. This section thus presents examples of retailer statements regardingadditionalfeesfornetwork_relatedservices. InVictoria,forexample,Simplyenergywillchargecustomersanadministrationfee of27.50 if a customer moves home. In NSW, Origin charges a Network Service ChargeAdministrationFeeof2.75whileforotherjurisdictionstheysimplystate: 52 VictorianEnergyRetailCode,Clause30 53 QueenslandElectricityIndustryCodeVersion14,Clause4.13.6(b) 54 NationalEnergyRetailRules46(2) 55 AER,RetailPricingInformationGuideline,Version3,June2012 Theleasttransparentretailchargesof themallaresocallednetworkservice chargesoranadministrationfee 23
EnergyRetailMarket:AdditionalFeesandCharges Thechargesfornetwork_relatedservicesmayincludeourreasonablecosts forarrangingsuchservices. 56 Dodo sonlinestatementaboutadditionalretailchargesstates: A Service Order Administration Fee may be applied to your account to recover our associated administration costs if we pass through Distributor chargestoyouforactivitiesthedistributorundertakesonourbehalfforyou, orinresponsetoarequestbyyou. 57 Energy Australia lists the charges that applies to the following services for each of thenetworkareas: Movingintoyourpropertyandconnectingelectricity(reconnectionfee) Vacatingyourpropertyanddisconnectingelectricity(disconnectionfee) Meter reading by technician upon request from customer (special meter read) Replace meter to facilitate renewable energy installation (solar installation read) AttheendofthedocumentEnergyAustraliastates: Thechargesfornetwork_relatedservicesmayincludeourreasonablecosts forarrangingsuchservices. 58 RedEnergy slistofadditionalservicechargesstates: AllfeesareGSTinclusiveandmayattractaProcessandHandlingCharge. 59 AGL s document called AGL Energy Plan Small Customer Market Contracts Fee Schedule effective as of 1 July 2013, lists most network related services as Pass Through.InrelationtoSouthAustralia,however,AGLliststheactualamountofthe Reconnectionfeeas41.55. 60 AGL senergypricefactsheetformarketoffersinsouthaustralia(effective1august 2013)confirmsthisamountbyshowing: 61 Reconnectionfee ThisfeeischargedbyyourDistributorandpassedthroughto youbyagl. Flatrate_41.55inc.GST 56 FromOrigin swebsiteinformationaboutadditionalchargesasof17january2014 57 DodoPowerandGas,AdditionalretailCharges,Applicablefrom15January2014 58 www.energyaustralia.com.au/other_charges(downloaded17january2014) 59 RedEnergy,AdditionalServiceCharges,Effectivefrom11April2013 60 AGL,AGLEnergyPlanSmallCustomerMarketContractFeeSchedule,Effective1August2013 61 AGL,EnergyPriceFactSheet,AGLSelect8%(AGL7334MR) 24
EnergyRetailMarket:AdditionalFeesandCharges Powerdirect, which is owned by AGL, on the other hand, makes the following statementonitsenergypricefactsheet(withthesamereleasedateasagl): 62 Reconnectionfee ThisfeeischargedbyyourDistributorandpassedthroughto youbypowerdirect. Flatrate_35.20inc.GST Clearly the reconnection charge should be the same if both AGL and Powerdirect simply passes through the distributor s charges and on the basis of Origin Energy s reconnection fee in South Australia being the same as Powerdirect s (35.20) we believe AGL s pass through statement is incorrect. 63 Furthermore, this leads us to questiontheuseof PassThrough (ratherthanstipulatingthecharge)inagl,and otherretailers,documents. 64 62 Powerdirect,EnergyPriceFactSheet,Powerdirect12%(POW6811MR) 63 Origin,SAResidentialEnergyFactSheet(Effective13January2014),DailySaverPlus 64 See,forexample,AGL,AGLEnergyPlanSmallCustomerMarketContractFeeSchedule,Effective1 August2013 25
EnergyRetailMarket:AdditionalFeesandCharges 4.Regulatorymeasures This section summarises the regulatory arrangements in relation to retail fees and charges in the NEM, assesses how well current arrangements are working, and proposesadifferentregulatoryapproachtothecurrentdisclosureframework. 4.1Marketoffersvs.standingoffers/standardcontracts Whilethefocusoftheanalysispresentedinthisreporthasbeenmarketoffers,this section looks at the regulatory provisions for standard contract/standing offers comparedtomarketoffers.inbroadterms,theregulationreliesonaframeworkof disclosurebyretailersandexplicitinformedconsentfromconsumersforadditional fees and charges attached to market contracts. In relation to standard contracts/standingoffers,theregulationtendstobemorespecific.wesupportthe disclosure/consentframeworkinprinciplebutthereisacaseformoreprescriptive regulationifretailersareallowedtoexploitthisarrangementand/ormarketoffers becomesocomplexthatitmakesitimpossibleforconsumerstocompare. We recognise the importance of market innovation in competitive markets but we questionwhetherinnovationintheadditionalfeesandchargessphereissomething thatactuallybenefitscompetitionandconsumersinthelongerterm. [W]equestionwhether innovationintheadditionalfees andchargessphereissomething thatactuallybenefits competitionandconsumersin thelongerterm Table 1 below summarises the regulatory provisions for the use of additional charges in relation to Victoria, Queensland and the NECF (which covers NSW, South Australia, Tasmania and the ACT), and it shows that there is some variation both in relation to standing offers/standard contracts and market offer contracts. 26
EnergyRetailMarket:AdditionalFeesandCharges Table1Regulatoryprovisionsforstandardcontract/standingoffersandmarketoffersin relationtoadditionalfeesandcharges Victoria Queensland NECF Standing Market Standing Market Standing Market Early Termination Fee LatePayment Fee Dishonored Payment Fee Payment Processing Fee NetworkW Related Service Fee NA Not allowed Allowed Not allowed NA Allowed NA Allowed Not allowed Allowed Allowed Not allowed Not Allowed Not allowed Allowed Allowed Not allowed Not allowed Allowed Allowed Allowed Allowed Allowed Allowed Not allowed Not allowed Not allowed Allowed Allowed Allowed RegulatoryrestrictionsapplytotheETFamountchargesinVictoriaandNSW,andwhenit canbechargesinqueensland Webelievethatsomeofthefeesandchargescurrently allowed for market offer contracts are simply legacy_ fees from a time when regulators determined retail prices for the majority of residential customers. Regulatorshavetotakevariousretailcostsintoaccount inordertodeterminewhattheappropriatepriceshould be.assessing the cost of servicing is thus part of this process and retailers would have an incentive to demonstrate all the additional costs they incur due to late payers, dishonoured payments, reminder notices etc. In today s market the majority of residential customers are on market contracts(although numbers [R]emovingtheuseof additionalretailfeesand chargesmayimprove innovationamongst retailersastheywould haveanincentivetofind morecosteffectiveways tocommunicateand servetheircustomersin ordertoprotectthe bottomline varysignificantlyfromjurisdictiontojurisdiction),meaningthattheretailerssetthe pricethemselves. 65 Asaresultretailersarefreetofactorinthecostoflatepayment fees, dishonoured payments, reminder notices etc. when determining their own price. In fact, removing the use of additional retail fees and charges may improve innovation amongst retailers as they would have an incentive to find more cost 65 InSouthAustralia81%ofcustomersareonamarketcontract,75%inVictoria,60%inNSW,46%on Queensland(but70%inSouthEastQueensland)and19%intheACT.SeeAER,StateoftheEnergy Market2013,p126 27
EnergyRetailMarket:AdditionalFeesandCharges effective ways to communicate and serve their customers in order to protect the bottomline. 4.2Disclosureregulationandretailerdisclosure As noted in section 3 above, the National Energy Retail Law tasks the AER with developingandmaintainingguidelinesforhowtheretailersshouldinformcustomers aboutadditionalfeesandcharges. 66 TheAER sretailpricinginformationguideline specifies: [T]he use of a template (Energy Price Fact Sheets) to present prices and other product information when retailers present or otherwise market or advertise pricing information to consumers. It also specifies the required informationoncontractofferstobeprovidedbyretailerstotheaerforthe pricecomparatorwebsiteandhowthatinformationistobemanaged. 67 The AER thus has to balance the issue of appropriate levels of information with information overload to ensure that the Energy Price Fact Sheets are useful documentsforconsumers.inrelationtofees,theguidelinestipulates: A retailer must on an Energy Price Fact Sheet, provide information on key feesthatareapplicabletoacontractofferinthetableformatpresentedin example 5. The information must include the amount of the fee in dollars, inclusiveofgstorasapercentageofthebillamount.keyfeesinclude(but arenotlimitedto): accountestablishmentfees exitfeesorearlyterminationfees(applicabletomarketoffer contractsonly) latepaymentfees disconnectionfees reconnectionfees paymentprocessingfees. If a retailer applies any further fees that are not considered key fees to a contractoffer,theenergypricefactsheetmustincludeareferencetowhere additionalinformationonthesefeesisavailable.anexampleofafurtherfee, which the AER does not consider to be a key fee, is a fee or charge that relatestoaspecialmeterreadormeterinspectionfee. 66AER,RetailPricingInformationGuideline,Version3,June2012 67 Ibid,p2 28
EnergyRetailMarket:AdditionalFeesandCharges Aretailermusttitleanyfeesrelatingtothedisconnectionorreconnectionof a small customer as disconnection fees and reconnection fees respectively. 68 AnexaminationoftheEnergyPriceFactSheetsproducedbytheretailersshowthat whileretailersfollowtheseguidelines,theinformationprovidedisoftenambiguous andtheinformationprovidedinthelinkstofurtherinformationisofteninadequate orevenmoreambiguous.forexample: Origin Energy lists most of its fees on the Fact Sheet but some of the text is very unclear. 69 Distributorcharges Disconnectionfee Reconnectionfee Additionalfees Youmustpayusanychargesthatyourdistributorimposes onusinrelationtotheservicesperformedbyyour distributor(oranyotherperson)atyoursupplyaddress. A35.20(GSTIncl)feemayapplywhenyourpropertyis disconnected(includingwhenyoumove).thisfeeis passedthroughfromyourdistributorandmayvary.please visityourdistributor swebsitetofindoutthecurrentfee. A35.20(GSTIncl)feemayapplywhenyourpropertyis reconnected(includingwhenyoumove).thisfeeispassed throughfromyourdistributorandmayvary.pleasevisit yourdistributor swebsitetofindoutthecurrentfee. Forinformationonadditionalchargesthatmayapplyvisit www.originenergy.com.au/2402/additional_charges Firstly, by clicking on the link and selecting South Australia you get to a webpage where the last line is: The charges for network_related services may include our reasonable costs for arranging such services. 70 Secondly, if 35.20 is the right amountwhyshouldprospectivecustomersgotosapowernetworkswebsite? SimplyEnergydoesnotstipulatedisconnectionandreconnectionfeesontheirFact Sheet. Instead, they ask customers to call or go to their website for more information. 71 Additionalinformation Accountestablishmentfeeisnotapplicabletothisoffer. Forinformationonadditionalfees,pleaseseeourfull contracttermsandconditionsavailableonourwebsiteor contactuson138808. 68 Ibid,p6 69 TheboxedtextisfromOriginEnergy ssaresidentialenergypricefactsheet(effective13january 2014). 70 http://www.originenergy.com.au/2402/additional_charges?g%5buser_state%5d=sa 71 TheboxedtextisfromSimplyEnergy senergypricefactsheetsasimplysave15/10 SIM3927MR 29