A backward step on protections
Two recent announcements in the energy and retirement village sectors show it’s two steps forward and one back when it comes to protecting consumers.
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While there are many things grabbing the news headlines, the less prominent ones often get overlooked. Yet, some of these are still important.
Last week, the Victorian Government announced reforms to retirement village laws to protect older people. The proposed changes were hailed in the media as a “crackdown” on providers because they included a mandatory code of conduct and requirements for clearer information to be provided to prospective village residents.
While these changes should be welcomed as steps forward, there was another change that seemed to be ignored in the media.
Under the proposed changes, village operators would now have a maximum of 12 months to repay a resident’s entry payment, when currently anyone who signed a contract after 2006 would receive their money back after only six months.
It’s a curious change, because it means providers can sit on their hands for an additional six months while residents and their families wait for their money, even though they no longer reside at the village.
This bizarre move means village operators have even less incentive to move quickly to find a new resident, because they have a financial incentive to do nothing.
The village might argue that that’s what people sign up for, but in what world is it reasonable to hold onto someone’s money for 12 months for a service or good they no longer use?
In a separate announcement, the Australian Energy Market Commission (AEMC) affirmed its plan to undertake its accelerated and mandatory roll out of smart meters. It did so crowing it had put in place significant consumer protections for electricity customers.
Yet, when looking into the detail, it becomes clear the protections are in fact quite limited. If anything, they look like window dressing to appease the industry at the future expense of households.
National Seniors raised concerns about the smart meter roll out and the lack of protections for consumers in two submissions to AEMC. You can read these here and here.
In essence, we questioned the argument that smart meters will have a significant benefit to many households because they enable complicated cost-reflective tariffs (e.g. time-of-use and demand tariffs) that have the capacity to result in significant bill shock if households do not have the means, skills, or resources to manage their energy use.
To recap, a cost-reflective tariff, like a time-of-use tariff, charges customers different rates at different times of the day to match the cost of energy at those times (e.g., during peak times when demand is high).
We argued that it is unfair that retailers can switch customers to these tariffs when a smart meter is installed without first getting consent (a “shoot first, ask questions later” approach!).
In a subsequent consultation, the AEMC proposed that retailers should be required to seek consent for a period of three years after the installation of a new smart meter. This is a position we opposed, calling for it to be an ongoing protection.
It is beyond belief the AEMC has now weakened consumer protections by walking back its original plan offering protection for only two years.
National Seniors Australia CEO Chis Grice said “The AEMC has failed to adequately explain how a two-year protection safeguards consumers. Households installing a smart meter won’t get any protection after this point. Furthermore, households already with a smart meter will get no protection from retailers forcing inappropriate tariffs on their customers.”
The problem isn’t smart meters per se. This technology could help some households to manage their energy use better, but only if they have the means, skills, or resources to do so. Many people will not, and they will be punished with higher bills.
“It’s simple – consumers should never be moved to time-of-use or demand tariffs without informed and explicit consent, especially given ongoing cost-of-living concerns,” Mr Grice said.
“They should only move to these if they have the means to manage the complexity they offer.
“The roll out of smart meters will place increased cost pressures on already struggling and financially stretched households if they cannot manage time-of-use or demand tariffs.”
Further, NSA has argued that demand tariffs should be banned, as they are only cost-recovery tools for retailers and do nothing to help households manage their use.
“Forcing people onto tariffs they don’t understand or can’t manage will have a negative impact for future energy reforms because ‘once bitten twice shy’ – the bill shock will see to this.” Mr Grice said.
“The government urgently needs to step in and override this poor decision before it’s too late for consumers. We are not opposed to smart meters for those who can manage them, we simply want adequate protections for the many who will struggle to understand the complex tariffs they enable.”
Our expectations are not high, yet the regulator has managed to disappoint with a decision that seems to benefit industry over everyday households.
