Consumer Protections in Australia's Electricity Market

In Australia, small to medium-sized enterprises (SMEs) and residential retail electricity and natural gas customers enjoy greater consumer protection than large commercial and industrial (C&I) customers due to several key factors. The primary difference lies in regulatory frameworks and consumer protection measures established to safeguard smaller customers, reflecting their relative vulnerability in the energy market.

Let’s explore how these protections differ:

In Australia, small to medium-sized enterprises (SMEs) and residential retail electricity and natural gas customers enjoy greater protection than large commercial and industrial (C&I) customers due to several key factors. The primary difference lies in the regulatory frameworks and consumer protection measures established to safeguard smaller customers, reflecting their relative vulnerability in the energy market.

Here’s how these protections differ:

1. Regulatory Frameworks and Codes of Conduct

Residential and SME Customers

These customers are covered by the National Energy Customer Framework (NECF), which applies across most Australian states and territories, along with specific state-based regulations such as the Victoria Energy Retail Code. The NECF ensures that residential and SME customers have:

Access to electricity and gas services.

Protections against disconnections due to non-payment.

Transparent billing information.

Cooling-off periods for contracts.

Protections for customers in financial hardship, including flexible payment plans.

Large C&I Customers

In contrast, C&I electricity or natural gas contracts are negotiated on a bespoke basis and do not fall under the NECF. These customers are expected to have the capability to negotiate contract terms directly with energy retailers and manage associated risks.

2. Consumer Protections

Residential and SME Customers

The Australian Energy Regulator (AER), alongside state regulatory bodies like the Essential Services Commission in Victoria, ensures compliance with consumer protection regulations for residential and SME customers. They enjoy protections such as:

Price caps on default offers, including the Default Market Offer (DMO), to prevent price gouging.

Easier access to dispute resolution through ombudsman services in each state.

Protection from unfair contract terms and mandatory clear communication of price changes.

Retailers must comply with stringent consumer laws, enforced by the Australian Competition and Consumer Commission (ACCC), which ensures retailers do not engage in deceptive marketing or unfair practices.

The ACCC plays a crucial role in ensuring competition stays healthy and smaller customers are not subject to unfair price manipulation or misleading offers.

Large C&I Customers

These customers have fewer automatic protections and typically rely on commercial negotiations with energy retailers. The ACCC’s oversight still benefits large C&I customers by preventing anti-competitive practices in the wholesale energy markets, helping to ensure fair pricing overall.

3. Tariff and Price Structures

Residential and SME Customers

Pricing for these customers is more regulated, with default market offers (DMOs) and standardized terms in place to protect them from unfair pricing practices. Government tools such as Energy Made Easy assist them in comparing energy offers.

Large C&I Customers

In contrast, large C&I customers operate in a more deregulated market, where they negotiate energy contracts directly with retailers, often with complex pricing structures tied to wholesale energy prices.

4. Financial Hardship Programs

Residential and SME Customers

Retailers must offer hardship programs that provide support to customers struggling to pay their bills, such as flexible payment arrangements. These protections are a core part of the NECF and help prevent disconnection for vulnerable customers.

Large C&I Customers

There are no specific hardship protections for C&I customers. However, they can negotiate payment terms with retailers on a case-by-case basis.

5. Disconnection Protections

Residential and SME Customers

There are strict rules regarding disconnection for non-payment, with retailers required to work with customers in financial hardship before proceeding with disconnection.

Large C&I Customers: Disconnection terms for large businesses are governed by the specific contracts in place, with fewer regulatory protections compared to smaller customers.

Category	Residential and SME Customers	Large C&I Customers
Regulatory Frameworks and Codes of Conduct	Covered by the National Energy Customer Framework(NECF) and state regulations like the Victoria Energy Retails Code. Offers access to services, protections against disconnections, transparent billing, cooling-off periods, and hardship programs.	Contracts are negotiated on a bespoke basis and do not fall under NECF. Customers manage contract terms directly with energy retailers.
Consumer Protections	The Australian Energy Regulator (AER) and state bodies ensure compliance. Includes price caps (e.g., Default Market Offers (DMO)), access to ombudsman services, protection from unfair terms, and clear communication of price changes. The ACCC enforces consumer laws and prevents unfair practices.	Fewer automatic protections. Rely on commercial negotations. The ACCC helps prevent anti-competitive practices in wholesale markets.
Tariff and Price Structures	Pricing is regulated, with Default Market Offers(DMOs) and standardized terms in place. Customers can use government tools like Energy Made Easy to compare offers.	Customers operate in a deregulated market, negotiating directly with retailers. Prices are often tied to wholesale market rates.
Financial Hardship Programs	Retailers must offer hardship programs, including flexible payment plans, as part of the NECF protections to help prevent disconnections for vulnerable customers.	No specific hardship protections. Large businesses may negotiate payment terms on a case-by-case bases with retailers.
Disconnection Protections	Strict rules prevent disconnection without first working with customers in financial harship, ensuring ample notice and opportunity to resolve payment issues.	Disconnection terms are governed by individual contracts, with fewer regulatory protections in place for large customers.

In Summary

Residential and SME customers are offered greater protections under Australian energy regulations, particularly under the NECF and through the ACCC’s enforcement of consumer protection laws. These protections include regulated pricing, hardship programs, and stricter rules around disconnections.

In contrast, large C&I customers negotiate more bespoke agreements and face less regulatory oversight but still benefit from the ACCC’s role in promoting competition and preventing anti-competitive behaviour in the energy market.

Concerned about your business energy contract?

Want to learn more about the consumer protections available to you as a business electricity user in Australia? Or are you interested in signing up for or renewing your contract? Get in touch with Leading Edge Energy by emailing us at info@leadingedgeenergy.com.au or calling us at 1300-852-770 for an obligation-free consultation.

We source, analyse, compare and rank commercial, industrial and multisite energy quotes. Obligation Free.

Chat with one of our experienced consultants today and get the insights your business needs to help manage the risks associated with volatile electricity and natural gas markets. Our energy procurement service is obligation-free and provides a time-saving way of securing lower energy rates from our panel of seventeen energy retailers.