Retailer obligations on saves and win-backs and move in switch events

Background

The Authority received a breach notification against a retailer of the saves and win-backs provisions. The retailer was alleged to have made a counter offer to a switching customer within the switch protected period.

Inquiries revealed that the customer was moving to a different city and was therefore moving from one ICP (old ICP) to another ICP (new ICP).

The alleged retailer (Retailer A) provided electricity to the customer at the old ICP. At the same time Retailer A was supplying electricity to another customer at the new ICP.

Retailer A received a referral from a third-party electricity plan comparison website. Retailer A then contacted the moving customer and offered an electricity plan for the new ICP. However, by the time Retailer A contacted the customer, the customer had already given consent to another retailer (Retailer B) to initiate the ICP switching and to act as the retailer for the new ICP.

Retailer obligations during the switch protected period and move in switch events

In this case, Retailer A contacted the moving customer and offered an electricity plan for the new ICP. Firstly, Retailer A did not check the ICP status in the registry. Secondly it did not consider its obligations in a switching event for a customer moving premises.

In this event, Retailer A was required to comply with the obligations given under clause 11.15AA of the Code. There is the requirement to not contact customer(s) switching from the losing retailer (Retailer A) to a gaining retailer (Retailer B). The Code does not allow for an attempt to persuade the customer to terminate the arrangement with the gaining retailer during the switch protected period. This includes making a counter offer to the customer or by offering an enticement to the customer.

Retailer A advised the Authority that it believed the:

• exemption provided under clause 11.15AB(1)(d) was relevant to this event. It received the customer information via a third-party electricity plan comparison website when the customer was looking for a better electricity plan.
• customer using a third-party website and agreeing to the conditions given on the website to receive information on a better power plan is the same as the customer inviting the losing retailer to attempt to persuade the customer not to complete the switch to the gaining retailer.
• customer was moving from one ICP to another ICP and was not receiving electricity from the retailer at the new ICP. Therefore, it did not consider itself as the losing retailer in this event.

Electricity Authority considered the event was a breach of saves and win-back provisions

According to the definitions given in the Code, move in events are switching events. Under the Code provisions, it is customers and not ICPs that are the subject of the saves and win-backs obligation. Accordingly, in this event, Retailer A was the losing retailer.

Furthermore, the Authority does not consider a customer’s use of a third-party electricity plan comparison website to compare electricity plans, as the same as the customer contacting the losing retailer to persuade them not to complete the switch.

The Authority decided to decline to take further action on the alleged breach under regulation 11(1)(c) of the Electricity Industry (Enforcement) Regulations 2010.

The reasons for the Authority’s decision were:

• the alleged retailer (Retailer A) accepted the breach and had taken steps to prevent recurrence.
• there was no actual market impact in the event as ultimately the customer switched to the gaining retailer (Retailer B).

Summary of learnings

This case provides a reminder to all industry participants to correctly understand and comply with the obligations given in the relevant clauses of the Code. Occasionally, the Authority publishes guidelines to provide further clarification on participants’ obligations under specific provisions of the Code. Participants should refer to any guidelines available on the Authority’s website.

Regarding switch events, retailers must check the ICP status in the Electricity Registry. Retailers should identify any ongoing ICP switch processes. They should clearly understand the situation before contacting a customer and before offering a counteroffer or an enticement.

The switch-protected period starts when a customer advises their retailer they are closing their account (at their current ICP) and switching to a new retailer. This information is available under the definition of ‘switch protected period’ in Part 1 of the Code. Subclause (a)(i) states “… or the losing retailer otherwise becomes aware that a customer is switching to a gaining retailer…”

Additionally, it is important that the participants report all possible breaches of the Code to the Authority. The Authority can take action to formally look into the alleged breach events. In making its decision, the Authority considers the breach history of the alleged participant as a factor.

Penalties for Code breaches have increased

From 1 September 2022, if the Rulings Panel determines an industry participant has breached the Code, it may impose a maximum pecuniary penalty order up to $2 million. Additionally, the Rulings Panel may make a pecuniary penalty order of up to $10,000 for each day or part of a day that a breach continues.