Watchdog’s eye on misleading energy marketing

watchdogTHE Australian Competition and Consumer Commission (ACCC) has put energy retailers across the country on notice about potentially misleading promotions, following a string of consumer complaints.
ACCC deputy chair Delia Rickard said it was a matter the Commission had flagged for a long time.
“The ACCC is very concerned about a lot of the marketing claims around discounts on electricity offers; the lack of clarity about what the discount is off; and what happens when standard rates change, in terms of the discount,” Ms Rickard said.
“We’re planning to write to retailers in the near future setting out our concerns, and putting people on notice that this is a priority issue for us.”
Ms Rickard said it was an issue previously raised by ACCC chairman Rod Sims at a conference in 2011, citing that the retail electricity market remained immature and that consumers were often uninformed and confused.
“The market cannot be seen as truly competitive whilst consumers aren’t able to participate effectively,” Ms Rickard said.
She said the ACCC continued to receive complaints about possible misleading promotions, and that it had put a lot of energy into dealing with alleged transgressions arising from door-to-door sales.
The ACCC has taken court action against a number of energy retailers and obtained “significant penalties” from them and their marketing companies for poor conduct in their selling practices.
These included misleading statements about the purpose of the salesperson’s visit and the price of products, and claims that consumers were being overcharged by their current supplier.
“Now we’re also focussing on what we call ‘discounts off what?’, because there is a real lack of clarity about that in a lot of the offers out there,” Ms Rickard said.
Rising energy costs have the potential to make existing concerns worse.
According to a report released last month by public policy think tank Grattan Institute titled Getting Gas Right, Australia’s Energy Challenge, the development of the nation’s LNG export industry could cause household gas prices on the east coast to rise by as much as $170 per year.
“Strong Asian demand and high prices are inducing Australian producers to export their gas. That means local consumers will have to pay higher prices,” the report stated.
Ms Rickard said energy plans had been a low-engagement purchase in the past. “People used to buy and stay; theydidn’t come home and think ‘oh I want to change my electricity plan tonight’. But as prices rise, consumers are engaging more with their electricity purchases and are looking at how they can save money, which makes them way more vulnerable to these sorts of offers.”
Ms Rickard said that although there was always more that could be done to protect consumers, a lot of “really good work” was being done by the Australian Energy Regulator, which is part of the ACCC.
“[Additionally], for those states and territories that have signed onto the retail law, the Energy Made Easy site is just a fabulous boon in terms of helping consumers to compare the products and offers that are
actually out there,” she said.
“Energy is a priority for ASIC [Australian Securities and Investments Commission] as well as ensuring that consumers can trust the offers that are made to them.”
At the beginning of the month, NSW became the latest state to implement the National Energy Customer Framework (NECF) to strengthen consumer rights. Federal Resources and Energy minister Gary Gray said it was an important energy reform that would also provide flexible payment options for customers facing financial hardship.
“As part of the NECF, NSW customers can instantly compare offers from gas and electricity providers by accessing the Australian Energy Regulator’s price comparator site, This website will make it easy to decide if they are on the right contract,” Mr Gray stated.
The NECF was developed by the Commonwealth and State and Territory governments through the Standing Council on Energy and Resources following years of consultation with energy retailers, distributors and consumer groups.
It protects energy consumers by requiring retailers to include model terms and conditions in their contracts; assists residential customers experiencing long-term payment difficulties; provides for limitations on disconnections; and includes requirements for more information on energy pricing to be included on customer energy bills. The Queensland Government plans to introduce the NECF next year.