Time for action in high-rise energy re-selling market

Customers of re-sellers miss out on critical consumer protections

Over recent years, population growth and a move to higher-density living have seen a surge in the development of high-rise apartment buildings in Melbourne. In a number of these developments, electricity is bought in bulk and then re-sold to residents. CUAC’s recent research looked at the implications for consumers.

Although electricity re-selling has been growing, remarkably little is known about its precise extent, where it happens, the companies involved or the experiences of customers. With this research project, CUAC wanted to help fill this knowledge gap by examining whether the consumer protections for re-sellers’ customers are adequate. To do this, they reviewed the literature on the current Victorian and the national regulatory frameworks for re-selling, and conducted a customer experience mail survey with 77 respondents.

Regulatory arrangements

Most Victorian residential consumers buy electricity from a retailer, which must be licensed by the Essential Services Commission (ESC). It is through this licensing mechanism that the ESC imposes a range of customer protection requirements on retailers.

Under a 2002 Order-in-Council, however, re-sellers are automatically exempted from the licensing requirement. In turn, this means that re-sellers’ customers are not entitled to the same protections as retailers’ customers. While re-sellers are required to observe ’all applicable provisions of the Retail Code,’ the applicability of each provisions is left open to interpretation by re-sellers. Moreover, there are no monitoring or enforcement arrangements in place.

At the national level, the Australian Energy Regulator (AER) re-selling framework offers consumers a much higher standard of protection. The ESC has signalled its intention to harmonise its retail energy regulatory framework with the national framework, and so CUAC is recommending that the Victorian Government extend protections to Victorian customers of re-sellers by amending the 2002 OIC to incorporate the AER re-selling framework.

Remaining gaps

Even if Victorian re-sellers’ customers were to benefit from the AER re-selling framework, however, some critical gaps would remain. One of these relates to dispute resolution. Re-sellers are not members of the Energy and Water Ombudsman (Victoria) (EWOV) scheme, which provides licensed retailers’ customers with free, specialist dispute resolution. This means that re-sellers’ customers must instead seek resolution via the Victorian Civil and Administrative Tribunal – a more expensive and difficult process.

CUAC’s consumer survey found that just under one-third of respondents had experienced some type of problem – most often relating to price, fees and charges or billing problems or errors – within the previous 12 months. Of this group, around 60 per cent made a complaint to their re-seller, but satisfaction with the outcomes of these complaints was highly variable.

Free, independent dispute resolution is critically important, especially for vulnerable consumers or where disconnection is imminent. We have recommended the immediate extension of the EWOV scheme to cover customers of re-sellers.

There are also gaps to do with payment difficulty and financial hardship. Around 15 per cent of survey respondents had experienced payment difficulty in the previous twelve months. A majority of these did not contact the re-seller for assistance, highlighting the potential pitfalls of relying solely on customer self-identification of payment difficulty or hardship. We therefore recommend a change to the AER retail exemptions framework, which, as it stands, does not recognise the role re-sellers have in identifying customers experiencing payment difficulties.

In Victoria, energy retailers are prohibited from charging small customers late payment fees. This is a longstanding and crucial consumer protection and one that we have recommended be extended to re-sellers’ customers.

Finally, gaps related to disconnection and reconnection also remain. Two respondents to CUAC’s survey had been disconnected from their electricity supply, offering a glimpse of some of the possible issues for customers of re-sellers. The experiences of these customers, neither of which reported receiving a warning or reminder notice, suggest a need for standardised procedures surrounding disconnection and reconnection. We have also recommended that customers of re-sellers have access to the same compensation for wrongful disconnection that licensed retailers’ customers are entitled to.


With the introduction of Full Retail Contestability for electricity in January 2002, Victorian customers were enabled and encouraged to choose from among competing retailers. For re-sellers’ customers, however, practical barriers make it difficult or impossible to actually exercise choice. None of the respondents to CUAC’s survey had successfully changed supplier, although around one third had tried to change or made enquiries about doing so.

These customers reported multiple barriers to switching. Many were told by the re-seller or a third party that they could not switch, while others were told they would need to arrange or pay for a meter replacement. A number of respondents reported feeling frustrated and considered it unfair that they could not shop around for a better offer. We have recommended that the Federal and Victorian governments further investigate these barriers to retailer choice for re-sellers’ customers, with the aim of reducing any unreasonable barriers. We have also recommended a requirement that potential buyers and renters be informed where electricity is supplied by a default re-seller.

Time to act

In 2006, the ESC reviewed re-selling arrangements and recommended several improvements. However, because it was then thought that Victoria would soon transition to a national framework, none of these were implemented. This has meant that re-sellers’ customers have gone without critical protections for a number of years. Urgent action is now required to ensure that re-sellers’ customers are brought in from the cold and offered immediate protections.

Download the full report at www.cuac.org.au/research