Regulation

What does ‘explicit informed consent’ mean when signing an electricity contract?

Explicit Informed Consent (EIC) is a key customer protection for energy customers in Australia. In order to sign an energy ‘Market Retail Contract’ (MRC) for your electricity, you must provide your EIC. In this update we explain what this means and how it protects you.

What is EIC?

Sections 38-42 of the National Electricity Retail Law, or ‘NERL’ (which applies in Queensland, New South Wales, Australian Capital Territory, Tasmania and South Australia), define EIC in the following way:

(a) the retailer, or a person acting on behalf of the retailer, must clearly, fully and adequately disclosed all matters relevant to the consent of the customer, including each specific purpose or use of the consent.

b) the customer gives the consent to the transaction. This means

  • in writing signed by the customer; or
  • verbally, so long as the verbal consent is evidenced in such a way that it can be verified and made the subject of a record under section 40; or
  • by electronic communication generated by the customer.

In addition, a retailer must keep a record of the EIC provided by each customer which will allow the Australian Energy Regulator (AER) to ensure that EIC has been complied with.  If a customer claims that they did not give EIC, the retailer must be able to provide evidence that they did in fact obtain EIC.

Customers must give their EIC to a range of different events (for example, EIC is required to charge a customer via direct debit), but our focus today is on the requirement for EIC before entry into an MRC (see section 28(b), NERL).

In this context, the purpose of EIC is to ensure that the customer is not just ‘signing on the dotted line’. Genuine engagement from their electricity retailer is required to explain the implications of the contract.

What happens if there is no EIC?

Investigating and penalising energy retailers for breach of EIC requirements is a major compliance priority of the AER. They have taken enforcement action against several retailers for breaching these requirements over the past few years. The Victorian energy regulator, the Essential Services Commission, has taken strong action against retailers for breaches of EIC as well. For example, last year action was taken against a retailer for misleading customers about rates they would be charged before entering into a contract.

If, as a customer, you are concerned that you did not give your EIC where it was required, you may complain at the first instance to your retailer, and then to the Energy Ombudsman in your state or territory.

Can I be charged for my electricity use even if I did not provide EIC?

Yes, in some circumstances. EIC is only required for you to sign up to an ‘MRC’, the most common type of energy contract, whose content is determined largely by individual retailers.

However, you may have agreed to enter into a ‘Standard Retail Contract’ or ‘SRC’. This is a standardised contract with a range of added customer protections. Your EIC is not required to enter into this contract. Though note – it is still a contract, so under the general law of contract your agreement is still required for the contract to commence.

It is possible for you to be charged for electricity use, even if you haven’t signed any form of contract (whether an MRC or an SRC). If you have moved into new premises and have begun consuming electricity without signing an energy contract, you may be charged for your use under what the NERL calls ‘deemed customer retail arrangements’ (see sections 54 and 55, NERL). This may also apply if you were on a fixed term contract which has ended and you have not signed up to a new energy contract.

Conclusion

The requirement for EIC is an important customer protection ensuring that customer’s know what they are getting themselves into when they sign up to a customer retail contract. If you want to find out more about EIC see the AER’s compliance check on EIC.

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