Better Bills Guideline: A bid to make energy bills easier to understand

Consumers’ energy bills will have to make clear when they’re paying too much for power, under a new, tougher rule proposed for energy retailers.

The Australian Energy Regulator’s (AER) ‘Better Bills Guideline’ draft outlines new billing requirements that aim to help households compare cheaper offers and better understand how their power usage is calculated on their bills.

The proposal, which is currently under consultation, will take a tiered approach, in which key sections of a customer’s energy bill should become more clearly recognisable.

‘Tier 1’ information would include the customer’s name, address, payment amount, retailer’s contact details, and a ‘better offer’ message clearly stated on the first page of their bill or most prominent page online/via an app.

Better-offer messaging lets bill-payers know if they are not on the cheapest or best offer from their existing provider. Victorian is the only state that currently requires retailers to put better-offer messaging on bills.

Canstar Blue Energy Editor Jared Mullane says expanding better-offer messaging nationwide would be a big win for Australian households.

“Comparing energy deals is a great way to cut the cost of running your home but not everyone regularly jumps online to compare prices,” he says. “Better-offer messaging will make it much more clear to consumers when they need to take action to get a better deal.”

In addition to showcasing these essential Tier 1 items on the first page, a standardised plan summary – which should break down how the bill amount was calculated, compare usage from the previous bill and explain how to seek help with payments if needed – is also to be added to bills.

This summary is classified by the AER as ‘Tier 2’ information and will immediately follow the first tier of information on a bill.

AER Chair Clare Savage says new research found that bill summaries helped customers better understand their energy costs.

“Bills play an important role in supporting switching,” she says. “Through our research we heard that people want their retailer to tell them about cheaper plans, and for it to be easier to compare their plan with other offers.”

According to the AER, 62 per cent of customers that saw a plan summary on their energy bill were able to understand the time of peak and off-peak periods better than those who did not have a bill summary.

By asking providers to add a short plan summary to energy bills, Aussies will be able to better compare offers for their home energy, Ms Savage explains.

“Over time, energy bills have become more complex and detailed in the level of information and usage calculations they provide, and our consumer research reveals this can turn customers off seeking the help they need,” she says.

“We know, for example, that low-income households spend up to six per cent of their disposable income on energy, twice the amount of average income households.

“We also know that people who have experienced financial hardship are more likely to find their bills difficult to understand. At the same time, our research shows that these consumers rely on their bills for information about how to access financial help or make a complaint.

The Better Bills Guideline is a key part of the AER’s ‘Consumer Vulnerability Strategy’ (also under consultation) which looks to better protect vulnerable energy customers as they participate in the market.

The AER will finalise the Better Bills Guideline on April 1 2022, with retailers to start implementing changes from August 4 2022 to March 31 2023.

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What will be expected of retailers under these new rules?

If approved, the Better Bills Guideline will expect energy providers to start simplifying the information displayed on bills. To do this, retailers will be expected to implement a short summary of the billing details, with consistency around messaging being emphasised.

According to the draft proposal, power companies will be required to do the following for their bills:

1. Use simple language
2. Make the bill easy to understand
3. Make the most important information most prominent
4. Order the bill to make it easy to understand
5. Design with practices proven to enhance customer comprehension

Notifying customers on their bills if they’re on their provider’s best deal is going to be helpful, but it won’t provide the full picture of what’s on offer in market, Mr Mullane adds.

“Once these proposed rules come into effect, it may help many Australians switch to a better offer, especially those who have been on the same deal with the same power retailer for a while,” he says.

“While it’ll be good to have bills that alert customers to potentially cheaper electricity plans, they won’t be seeing what else is on offer from other providers that may be operating in their area.”

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