The need to intervene in the market in the area of domestic retail contracting arrangements was considered, and various options ranging from taking no action (i.e. relying on general consumer protection law) through to a fully regulated domestic retail contract were explored.

A draft set of Reasonable Consumer Expectations (RCEs) was identified for domestic electricity consumers and proposed for consultation, and the extent to which the options identified could assist in meeting those expectations was assessed. It is important to emphasise that the set of expectations was written from the consumer perspective and related to matters wider than just the retailer contracting relationship.

In its consultation paper, the Electricity Commission proposed a voluntary approach to retail contracting arrangements based around a comparatively narrow set of suggested minimum terms and conditions, supported by a set of good contracting principles. The RCEs were used to develop the draft set of principles and terms for consultation. It should be noted that the RCEs were not intended to be the performance standard for assessing compliance per se; rather, they provide a framework for identifying terms and conditions that reflect the reasonable expectations of consumers (as referred to in paragraph 38 of the Government Policy Statement).

Having considered submissions, the Electricity Commission:

  • remained of the view that there is a need to take some action to protect the interests of consumers in their domestic retail contracting arrangements; and
  • considered that there is reasonable support for its proposed approach (even though some of that support comes from parties who are not convinced of the need to intervene at all).

In finalising the domestic retail contracting arrangements, the Electricity Commission:

  • made some amendments to the set of RCEs; and
  • made some amendments to the set of contracting principles and minimum terms.

We concluded the review of the alignment of domestic electricity contracts with the suggested minimum terms and conditions that was initiated as a two-year process in 2010. The 2012 alignment review report is available from this page (together with the results of the June 2010 baseline review and the July 2011 alignment review).

The report sets out the results of the 2012 review and comments in general terms on the extent of alignment with the minimum terms across retailers and the improvement in alignment since the baseline review. The key findings were that:

  • Most retail contracts are now highly aligned with the minimum terms
  • Retailers whose contracts have not previously been reviewed generally have a lower degree of alignment
  • The review process appears to have positively influenced domestic retail contracts

The monitoring of retailers' adoption of the proposed arrangements took place over a two-year period. At the end of the two-year period, an assessment will be made as to whether the voluntary approach is achieving satisfactory outcomes, or whether alternative approaches are warranted.

Monitoring starterd in June 2010 with a baseline review of the level of alignment between each retailer's own contracting documents, and the published set of suggested minimum terms and conditions. The baseline review was relatively informal and individual results were not made public.

The first formal review took place at the end of the first year (in July 2011), with the final review; one year later (in July 2012).