Scope of the review

The scope of the review required Powershop, Simply Energy and EnergyAustralia to demonstrate and provide evidence of compliance of their disconnection processes with certain regulatory provisions between 1 March 2022 and 28 February 2023. 

The review focused on the retailer's compliance with the following specific regulatory provisions:

• clause 191 of the Energy Retail Code of Practice (ERCoP) which addresses the procedures for customer-initiated disconnection requests.
• section 40SQ of the Electricity Industry Act 2000 and section 48DS of the Gas Industry Act 2001, which set out the circumstances where supply may be disconnected:
  1. for a customer who takes over supply at a property without entering a contract with a retailer
  2. for customer whose contract expires or terminates and who do not enter a new contract with the retailer
  3. if the relevant customer refuses or fails to take appropriate steps to enter into a contract for the supply of energy
• processes and procedures retailers have in place to identify and report any potential or actual breaches in line with the commission’s Compliance and Performance Reporting Guideline (version 7).

Key findings across all retailers

We have summarised the key findings of the three reviews undertaken by each retailer in the following section. The causes of wrongful disconnections and improvements identified do not relate to all three retailers subject to the reviews individually. They are aggregated findings across all three retailers designed to educate the energy retail industry on disconnection processes to seek better voluntary compliance. 

The independent reviewers found that overall, Powershop, Simply Energy and EnergyAustralia have a combination of preventative, detective and corrective controls in place. These are designed to help avoid wrongful disconnection of Victorian consumers from their electricity or gas supply. Some key highlights are:

• Powershop has a system which eliminates multiple data entry points and prevents frontline staff from raising a disconnection service request if there is a pending move in request for another customer at the same property. 
• EnergyAustralia has an hourly report process through which it identifies concurrent service orders for the same location. It can then take appropriate steps, such as cancellation of a service order, to ensure only correct service orders are completed, to prevent wrongful disconnections or ensure ongoing supply.
• Simply Energy has an arrangement where its third-party providers’ quality assurance processes are designed to mirror its own, maintaining visibility into its operations to ensure Simply Energy’s compliance with Victorian energy disconnection rules.

Causes of the wrongful disconnections 

Each of the three retailers has their own unique compliance processes and systems. However, our assessment of the reviews is that the primary causes of the wrongful disconnections across all the three retailers relate to varying degrees of shortfalls in their respective systems, controls, processes and governance. Examples of these shortfalls were seen in four key areas, but do not all apply to each retailer individually:

• maintaining multiple data entry points that increase the risk that disconnection orders may not align with a customer’s request
• inadequate controls that allow frontline staff to raise disconnection requests incorrectly
• inadequate mandatory checks of disconnection requests that resulted in the failure to identify errors
• inadequate controls that resulted in changes to disconnection warning notices that was non-compliant with the rules in ERCoP.

Improvements identified

All three retailers regularly undertake quality assurance and compliance checks of frontline staff’s interactions with customers across various contact channels including third parties. These quality assurance programs include disconnection of energy supply. The three retailers also have established comprehensive internal and external reporting processes to identify potential disconnection issues and report them. However, through the reviews we identified the need for further improvements for each retailer. Three key examples of improvements identified are outlined below. All three examples do not apply to each retailer individually:

Remediation of compliance issues

Powershop, Simply Energy and EnergyAustralia have all made some positive changes, shortly prior to the compliance reviews and as an outcome of the reviews. These are designed to mitigate human error risks which may improve their overall compliance with Victoria’s energy disconnection rules.

For example, all three retailers have included or enhanced a control mechanism through SMS text or email confirmations for disconnections following the reviews. These messages are sent to customers’ mobile phones or email accounts before a disconnection occurs. They are intended to provide customers with more information about the requested disconnection, for example the date of disconnection. This aims to assist customers with identifying errors so they can notify their retailer.

Each retailer has committed to a remediation plan that seeks to address the compliance issues identified through the reviews. The key actions taken by, or that will be taken by, each retailer to reduce the risk of customers being wrongfully disconnected is outlined below.

Simply Energy

In summary:

• Simply Energy is enhancing its compliance framework and governance system by implementing a new system. This new system will provide a centralised oversight of risks and controls associated with disconnection obligations.
• enhancing its existing SMS process for customer-initiated disconnections. This includes of the address of the disconnecting property and enabling customers to respond to the SMS.
• Simply Energy is expanding its quality assurance processes to include customer-initiated disconnection requests where the customer is not requesting the connection for a new premises (‘move-out only’ requests).
• Simply Energy is improving its controls and processes by:
  1. conducting a disconnection workshop
  2. completing a review of its end-to-end disconnection processes to identify and mitigate any risks associated with systems, people and processes completing system changes to ensure that a customer’s requested date for a new connection does not automatically align with the customer’s requested disconnection date.

Powershop

In summary:

• Powershop has initiated a cross functional project across its business to identify and implement changes to mitigate the risk of customers being wrongfully disconnected. 
• Powershop will be conducting a review of its IT systems to better store its disconnection processes and procedures.
• Powershop will be documenting additional processes to help support frontline staff assist that manage disconnection processes.
• Powershop is improving its process of capturing and storing records of staff training.

EnergyAustralia

In summary:

• EnergyAustralia has updated some existing controls and is reviewing its disconnections-related governance, controls and processes in place across all its business units.  This exercise aims to ascertain the effectiveness of existing controls and identify any gaps that require additional controls.
• EnergyAustralia has temporarily paused unknown consumer related disconnections and disconnections for non-payment while it is undertaking the review and implementing new preventative controls.
• EnergyAustralia is considering improvements to the content of its automated SMS text messages. It has implemented a new email disconnection reminder for customers. 
• EnergyAustralia is implementing ongoing customer remediation in relation to its failure to give the correct notice period on its intention to disconnect notice for 1,183 electricity and gas customers in June 2023. Specific steps it has taken include:
  1. paying approximately $150,000 in wrongful disconnection payments to 226 customers 
  2. implementing arrangements to inform customers about the wrongful disconnection 
  3. addressing any complaints from the remaining affected customers about wrongful disconnection payments
  4. committing to making wrongful disconnection payments to the remaining impacted occupiers of affected premises at the of disconnection for a further 12-month period.