The Energy Legislation Amendment (Consumer Protection) Bill 2015 is yet another election commitment being honoured by the Andrews Labor government. During the last election campaign we said we would improve consumer protection for the retail energy market, and this bill deals with that. These protections have been developed in response to surges in disconnections of essential services in Victoria. The statistics are very troubling, I have to say. We have the full figures for 2012–13 and 2013–14, where we see that electricity disconnections rose by 36 per cent and gas disconnections by 42 per cent. Wrongful disconnection has more than doubled from about 400 up to 1000. The energy and water ombudsman of Victoria saw an increase of 21 per cent in affordability cases. Households are faced with an increase of about $100 each on their gas and electricity bills.
Small business has been hit even harder with an average increase of $370 for electricity and $490 for gas. What is particularly concerning about these figures is that they were recorded prior to, for example, the car industry leaving Victoria, when tens of thousands more Victorians will lose their jobs, decreasing the ability of those families to pay surging bills. Despite all this evidence that more people are struggling to meet financial requirements, the Liberal federal government is planning and was insisting on an attack on penalty rates. It should reek of common sense that if people are having trouble now paying their bills, then cutting wages will mean even more Victorians will struggle to do so.
With these two rather formidable obstacles looming in the near future and the previous government’s laissez faire attitude in this area, Labor is introducing this bill to put consumers first in the energy market. Too many Victorians have been losing their power. The previous government did very little to stop it. It stood back and watched Victorians have their power disconnected in record numbers.
Labor believes that gas and electricity are essential services. The companies that supply these services have an obligation to give Victorians every chance to maintain supply, and this bill provides for that in several ways.
As mentioned by previous speakers, this bill amends three acts: the Electricity Industry Act 2000, the Gas Industry Act 2001 and the Essential Services Commission Act 2001. The bill amends these acts to strengthen the ability of the Essential Services Commission, the regulator, to enforce compliance with consumer protections. Further to that, consumer protections are strengthened. The Essential Services Commission has been given five new enforcement powers. First, there is the energy industry penalty, which will see the commission able to impose a $20 000 penalty if it believes an energy sector licensee has breached its regulatory obligations. The licensee may resolve the case with the commission without admission of liability by paying the penalty. If the licensee fails to pay, the commission may apply to the Supreme Court for an order directing payment or another order as the court considers appropriate.
There is then the wrongful disconnection penalty. The commission will be able to require the payment of $5000 for each breach of the energy retail code that leads to a customer being wrongfully disconnected. This penalty, too, can be paid without admission of liability, or the commission can take it to the Supreme Court. The commission will also be able to accept voluntary undertakings from energy sector licensees to remedy breaches of regulatory obligations. Once again the commission will have the right to take the matter to the Supreme Court if there is a failure to comply with the undertaking.
The bill will also allow the commission to vary the licence conditions of an energy sector licensee to remedy a breach and prevent future breaches. The licensee’s consent is not required to use this power. The commission will also have the power to order corrective advertising for regulatory breaches by way of notices explaining that the commission has taken action and why this action has been taken against the licensee. On top of these new powers, the penalty for failure to comply with a civil notice penalty has increased to 680 units, which is $100 000, up from 120 units, which is $17 000. These new powers give the commission a more flexible approach to respond to breaches and to discourage future breaches.
Sitting suspended 6.30 p.m. until 8.04 p.m.
Ms TIERNEY — Just prior to the dinner break I was talking about the new powers of the commission and how the civil notice penalties had been increased to 680 units, essentially meaning $100 000, up from what was 120 units, or $17 000. These new powers give the commission a more flexible approach to respond to breaches and to discourage future breaches. If licensees comply with the regulations, then there will not be a greater compliance cost.
There are also greater consumer protections in the bill for wrongful disconnection. Consumers experiencing a wrongful disconnection have been entitled to a compensation payment of $250 a day from the licensee since 2004, and this has been mentioned by previous speakers. But this amount has obviously not provided an incentive for retailers to prevent these wrongful disconnections, as evidenced by the skyrocketing numbers of wrongful disconnections that I spoke about at the beginning of my contribution. Wrongful disconnections are a massive inconvenience. Obviously food spoils, heating is unavailable and a family may not even be able to cook. If one or several members of a family are in precarious employment, whether be casuals, labour hire workers or on call, they need to have their mobile phones charged at all times so that they can hopefully take a call which lets them know they will be engaged to work.
Wrongful disconnection is a separate issue from hardship claims. It is when the licensee has jumped the gun on a disconnection, and it is a serious breach of the energy retail code. The code strictly regulates the circumstances and the steps that must be taken prior to disconnection. Despite the requirements of the code, wrongful disconnections are at unacceptable levels in this state. Therefore this bill doubles the penalty and provides for a payment of $500 a day to consumers who are wrongfully disconnected.
On top of these enforcement measures and penalties, the bill amends the Essential Services Commission Act 2001 to require the commission to publish an annual report on compliance and enforcement. Energy retailers will be obliged to report to the commission along guidelines issued by the commission. This report will be updated quarterly and is an important transparency improvement for consumers to make choices about their energy providers.
This bill does not stop there in its quest for greater transparency and consumer protection. It also amends the Essential Services Commission Act 2001 to allow systemic issues to be referred to the commission from the energy and water ombudsman Victoria, the dispute resolution body for energy consumers. The commission will then report to the minister on what action it takes on the referral. A systematic issue is an issue that may not be a breach of energy sector consumer protections but which adversely or may adversely affect a number of customers. These can be matters such as the duplication of accounts, confusing pricing, confusing energy offers or transferring accounts without the customer’s consent. Whilst these are often resolved immediately without further action, this reporting process allows for ministerial oversight and is another level of protection for consumers, which is an important thing that needs to occur.
I know from direct experience that a hot topic and common experience amongst many households is the constant problem with energy retailers and the high number of calls having to be made to make sense of their billing and to get some accountability.
Whilst these are often resolved immediately without further action, this reporting process allows for ministerial oversight, and it is another protection for consumers.
A further level of consumer protection in the bill is the banning of exit fees on fixed-term contracts. When most people get a contract for a fixed term they are expecting a fixed price, but it seems that this is not always the case. Most people think a fixed-term contract is fixed both ways: time frame for the retailer and price for the consumer. It is not an unreasonable expectation. However, fixed-term contracts can allow for price increases. This bill will rectify that situation and allow consumers to more easily compare offers and seek a better deal. Consumers will have more confidence in dealing with the energy market. It will also create greater competition in the retail market. It should be noted that genuine fixed-term and fixed-price contracts will not be affected by these amendments.
The bill also supports this government’s approach to renewable energy. It amends the Electricity Industry Act 2000 to ban discrimination against solar and other small-scale renewable projects. Some retailers offer higher fixed charges to solar users, thus providing a barrier to entry. This bill will remove that barrier.
In conclusion, this bill contains an important set of amendments. They are aimed at making sure that the energy market serves consumers in the best way possible. The amendments put consumers first; they clearly outline the standards we expect in Victoria for participants in essential services markets. They create clear expectations, there are clear reporting requirements and there is a strong compliance phase.
This bill supports renewable energy users. I would definitely argue that this is a long step forward in terms of protecting families. These amendments put Victorian consumers first. This is another Andrew’s Labor government election commitment that we see is being honoured. It has been supported by the wider community, and I have the pleasure of commending this bill to the house.