BILLS Australian Energy Market Amendment National Energy Retail Law Bill 2011 Second Reading

Mr HUSIC (Chifley—Government Whip) (16:50): I am pleased to contribute on the consideration of the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. We arrive at this point today after a journey spanning two decades, a journey embarked upon in the 1990s when the Council of Australian Governments had the foresight to agree upon the need to establish a national electricity market. It was a key microeconomic reform of the 1990s and something that a former Labor government was involved in in conjunction with state Labor and Liberal governments at the time. In the time since the establishment of the market we have seen more dynamic pricing and breaking down of the old monopolies that existed in the sector and witnessed the entry of new companies, the creation of new jobs and the creation of a more customer responsive climate that has benefited both business and residential customers and that has helped deliver significant historical savings on business inputs.

COAG has maintained its commitment to this important microeconomic reform and I emphasise the point that both sides of politics have worked together to see reform work to the advantage of the nation, the economy and the community. In fact, the legislation that we debate here today is the last big part of the national energy market reform program agreed by COAG in response to the recent 2002 energy market review paper Towards a Truly National and Efficient Energy Market.

The main aims of the bill that is before the Main Committee and that will be considered by the House include streamlining regulatory requirements, increasing efficiency by harmonising regulations and delivering best practice consumer protection. What I like about this bill is that it aims to deliver benefit to industry—to businesses within the sector—and, importantly, to consumers, which will balance that out. That is to be commended and I will reflect on this further in my contribution today.

The national energy retail law will provide energy consumers with a range of benefits, ensuring that they can access energy services on fair and reasonable terms. Over the longer term, the expected reduction in red tape that the national energy retail law facilitates will provide an efficiency boost in energy service delivery and foster greater competition, helping provide an environment that can deliver more competitive electricity prices and offers. This increase in competition will also see retail customers benefit from more choice in energy retailers and in the services that they offer. The bill recognises that energy is an essential service and therefore will give consumers stronger protections.

The bill makes structural changes to a number of existing acts, like the Australian Energy Market Act and the Competition and Consumer Act, in order to give the necessary powers to the Australian Energy Regulator, the Australian Competition Tribunal and the Federal Court. The national energy retail law will work hand in hand with our new Australian consumer law to provide small customers with a range of strong consumer protections. It will also see the entire energy supply chain from wholesale markets to transmission and distribution networks through to retail markets brought under one regulatory umbrella via the Australian Energy Regulator. This is a significant improvement, especially considering the enormous level of state based regulation applied to the sector. Embedded within the legislation is a national energy retail objective to promote efficient investment in and efficient operation and use of energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and supply security; and, importantly, it will guarantee access for all small customers to an offer of supply of energy. It will set out mandatory minimum terms and conditions for retail contracts for all small customers and set up a framework for customers wishing to connect to new gas and electricity networks, including the installation of solar photovoltaic systems for the export of energy to the grid, and that will become something of greater prominence in the years ahead as more people seek to engage in that form of activity.

I reflected earlier on the way this legislation seeks to balance the interests of all those affected or working within the sector, and as much as the legislation is designed to help businesses operating in the sector nationally, it is mindful of the needs of consumers across the country. One area I was heartened to see some focus on was the way in which energy suppliers deal with customers experiencing difficulties paying bills. This legislation will require retailers to develop a customer hardship policy which will need to be approved by the Australian Energy Regulator and which must contain a range of programs to help residential customers experiencing longer term financial difficulties. The hardship regime includes protections for vulnerable customers, including a prohibition on the charging of late payment fees, which has been controversial in their implementation and operation; a ban on requiring a security deposit; and a requirement on retailers to allow payment by using Centrepay. Beyond this there will be limitations on the disconnection of customers—which I think a lot of people, particularly in hardship situations, will welcome—including distinct processes to follow, restrictions on when a disconnection may occur, additional protections for customers experiencing hardship or difficulty, and a prohibition on disconnecting premises particularly where life support equipment is required.

Another feature to emerge from changes within the sector has been the rise of door-to-door sales techniques designed to encourage customers to switch energy suppliers by signing new contracts for energy from a rival supplier to the one they currently use. While some consumers have welcomed the chance to change suppliers and lock in savings and get better service, others have felt pressured to sign the contracts. They have felt overawed by the complexity of the contract wording or they have had difficulties in exiting contracts where they feel that the contracts themselves have not lived up to the expectations promised in the actual negotiation phase. Energy marketing rules that build on the requirements set out in the Australian Consumer Law will ensure energy consumers receive full information before they enter into an energy contract, be it for electricity or gas or both. Importantly, the bill will hold retailers accountable for marketing that is conducted on their behalf. Again, I think that it an important learning that has emerged out of the process of change that has occurred, particularly through the course of the last decade.

The Australian Energy Regulator will develop a price comparator website like the ones currently available for health and car insurance so that customers will be able to compare retail offers put before them, and, where they need to be accessed, consumers will be able to resolve disputes with energy businesses through a consistent approach across jurisdictions. Retailers and distributors will be required to handle customer complaints in accordance with published procedure, which must be consistent with the applicable Australian Standard. Given that a lot of retailers are operating across state boundaries, it is important to be able to set in place a consistent set of arrangements as they apply to customer complaint resolution. If the customer is not satisfied with how the retailer or the distributor has handled the complaint, obviously they can refer the matter to the energy Ombudsman in their state or territory.

On this point, as much as we have seen improvements in the way that the sector has responded to customer need, we also know that they can perform better. One only needs to refer to the workloads of Energy and Water Ombudsman operations to know that consumers are not backward in coming forward about poor service. Some of the matters I remarked upon earlier form a healthy part of the day-to-day work of the ombudsmen as they operate in different states. I am mindful, in particular, of reference to the Energy and Water Ombudsman in New South Wales, who has got a healthy workload, particularly if you look at the latest stats that have been put out, which span from October 2010 to March 2011. They do remark that over the course of four years complaints about retailers have increased or continued to increase. A lot of them revolve around billing issues—for example, disputed accounts. The number of consumers complaining about debt collection or credit default listings because of a high utility debt has increased. Also, in terms of retail competition, complaints about marketers misleading or pressuring consumers continue to increase. That, as I have said and reflected on earlier, is what has been looked at through the course of this legislation and what is intended to be introduced through the course of the work of the Australian Energy Regulator to ensure that there are standards that exist across the nation so that, regardless of where consumers live, they can have some sort of protection and some sort of ability to resolve disputes. The legislation itself establishes a strong national regime to protect, as I have said, customers, particularly in the event that a retailer fails, and I would draw attention to the fact that there are provisions for a retailer of last resort. Of themselves these arrangements are not exceptional—they have been in place as a result of state based retail deregulation—but it is important to deliver a degree of consistency about the application and operation of retailer of last resort arrangements, especially when one considers how critical they will be in providing continuity of service in the event of a company being unable to continue in operation.

Services and protections such as the ones that I have reflected upon in the contribution in the Main Committee today will become increasingly important in the face of a rise in electricity prices that is occurring in states and territories, and it is our responsibility to enshrine them now to assist those that may be vulnerable. I will just leave my remarks at that, and I do commend the legislation to the Main Committee and welcome the fact that, as remarked upon earlier, we have now a national energy or electricity market and we have operators that are moving across state boundaries. There are opportunities now for businesses to participate in this sector in a way that 20 years ago they would not have imagined. As much as this seeks to liberate a lot of those companies from needless regulation or conditions that do not necessarily benefit consumers or those industries—or those businesses, I should say—it also puts in place a strong consumer protection regime. I note that the minister is present. Again I commend the fact that the legislation does seek to balance out the industry interests along with those of consumers. Thank you.

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Ed Husic MP
Federal Labor Member for Chifley

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