Reviewing the Energy Retail Code of Practice: a new direction for Victorian retail energy regulation

What’s happening?

• The Essential Services Commission Victoria (ESC) is seeking feedback on further proposed reforms to the Energy Retail Code of Practice (ERCoP);
• Consultation on the Targeted Consumer Reforms and Regulatory Efficiency Draft Decision Paper (Draft Decision Paper) is open until 5pm, 23 October 2026;
• The ESC expects to make a final decision on the proposed further amendments in December 2026 and proposes that the reforms will commence on 1 March 2027;
• These additional changes follow significant earlier reforms to the ERCoP, with that final suite of changes coming into effect on 1 October 2026 alongside the implementation of the Midday Power Saver time-of-use tariff.

Key proposed reforms

The draft Decision Paper proposes several additional further amendments to the ERCoP, including:

• introducing an express obligation on Victorian energy retailers to handle small customer complaints in accordance with their published complaints handling and dispute resolution procedures, and specifying that obligation as a civil penalty requirement;
• establishing information provision requirements for gas disconnection and abolishment services; and
• implementing measures to streamline existing obligations for energy retailers and make consequential amendments for the Midday Power Saver offer; and
• clarifying compliance obligations, including the treatment of discounts and benefits under ongoing contracts.

Ahead of the close of submissions on 23 October 2026, we have highlighted some of the key proposals for organisations to consider when assessing the reforms and responding to the draft Decision Paper.

Key themes emerging from the draft decision

A potentially significant proposal: new complaints handling and dispute resolution changes

The ESC proposes to clarify that energy retailers must comply with their own published complaints handling and dispute resolution procedures. While framed as a clarification, the revised draft of the ERCoP reveals that the new obligation would be prescribed as a civil penalty requirement. As a result, retailers may wish to carefully review whether their operational practices consistently align with the commitments contained in their publicly available complaints policies.

Replicating the NECF’s approach by creating a framework for flexible trading  

The draft decision proposes aligning Victoria's retail framework with emerging national arrangements for Consumer Energy Resources (CER) flexible trading under the National Energy Retail Rules. As Victoria prepares to introduce flexible trading rules for technologies such as solar, batteries and electric vehicles, the ESC proposes implementing a framework which:

• allows small customers to manage and meter flexible loads separately from their general electricity loads;
• provides an opportunity for small customers to participate in flexible energy trading; and
• allows a customer’s premises to have secondary settlement points, meaning that separately measured flexible loads can be used in market settlement and billed under a secondary settlement arrangement.

In practice, this could mean that flexible loads, such as electric vehicles or batteries, could be measured through a secondary settlement point and treated separately from general household consumption for settlement and billing purposes. For example, electricity used by a residential customer’s EV charger could potentially be separately measured and billed under a dedicated tariff, while the customer retains a different tariff structure for general household consumption. A secondary meter can only be arranged by the licensed retailer responsible for the customer’s primary settlement point.

A key objective stated by the ESC in this proposal is ensuring that the same ERCoP protections are applied to secondary settlement arrangements, including where separate contracts or bills are issued for the primary and secondary settlement point.

Implementation of these amendments is contingent on the Victorian Government implementing the necessary changes to Victoria’s electricity metering framework. These issues are also currently under review following consultation by the Department of Energy, Environment and Climate Action (DEECA) earlier this year. DEECA has indicated that the remaining flexible trading reforms would be progressed through Orders to be developed and finalised by 1 November 2026.

Information for customers on gas disconnection and abolishment

Recognising growing consumer electrification of households, the draft decision proposes new obligations that would apply to retailers when customers enquire about gas disconnection or abolishment services, or indicate that they wish to terminate their gas contract. In these circumstances, retailers would be required to:

• provide customers with general information about gas disconnection and gas abolishment services; and
• direct customers to their distributors for more specific questions about these issues.

Preparing for the Midday Power Saver offer

The draft decision includes consequential amendments to support implementation of the Victorian Government’s Midday Power Saver, a time-of-use tariff required to be offered by Victorian energy retailers from 1 October 2026.

As discussed in more detail below, the Midday Power Saver offer was established in an Order in Council, which set out transitional consumer protections. The proposed ERCoP changes would integrate the new offer into the existing Victorian retail framework, including customer consent, disclosure and cooling-off arrangements.  

Other key changes

The draft Decision Paper proposes removing duplicative ERCoP requirements relating to greenhouse gas disclosure and electricity bill benchmarking, though these obligations remain in place under the Electricity Industry Act 2000 (Vic). The ESC’s stated aim in removing them from the ERCoP is to streamline obligations and reduce regulatory duplication.

The draft Decision Paper also contemplates proposed amendments to the ERCoP’s existing provisions which deal with fixed benefit periods. If implemented, the changes would make explicit the ESC’s position that these benefits must continue for the life of the contract, including where they are offered under ongoing contracts without a fixed end date, sometimes referred to as ‘evergreen’ contracts.

A stated aim of the draft Decision Paper is to reduce regulatory burden where ‘obligations are considered outdated, duplicative or unlikely to deliver proportionate consumer benefits.’ To this end, proposed changes also include:

• removing the requirement for retailers to display start and end index meter reads on bills for customers with interval meters; and
• clarifying that best offer messages are not required on final energy bills.

The ESC considers these changes could reduce customer confusion while allowing retailers to streamline administrative processes.

Regulatory context: Victoria’s Midday Power Saver and Energy Consumer Reforms 2025

The ESC’s proposed ERCoP reforms come off the back of several earlier significant reforms to Victoria’s energy rules, which come into effect from 1 October 2026. These reforms carry two linked objectives:

• protecting vulnerable customers by requiring retailers to proactively identify and apply appropriate support measures; and  
• sending market signals to encourage customers to shift their energy consumption to the middle of the day, which typically sees the lowest daytime spot prices alongside the highest levels of solar generation.  

Together, the reforms mark a shift in the role of energy retail regulation. Rather than relying on customers to identify and act on better offers themselves, the focus is increasingly on requiring retailers to proactively intervene to improve customer outcomes by:

• moving select customers onto the deemed best offer;
• limiting when disconnection can occur; and  
• using regulated tariffs to encourage consumption at times that better align with the system’s needs.

These reforms are discussed in more detail below:

The ERCoP reforms: removing friction and the loyalty tax

Schedule 4 of the Energy Retail Code of Practice (Energy Consumer Reforms) Amendment 2025 (the Reforms) introduces several key changes to ERCoP.

Coming into effect on 1 October 2026, the Reforms require Victorian energy retailers to:

• conduct a deemed best offer check for residential customers who:
  
  • are receiving tailored assistance; or
  • have been in arrears for at least three months and have accumulated arrears of $1,000 or more for the relevant fuel type; and
  • where that check identifies a cheaper deemed best offer by more than $50 per year, the retailer must switch the customer to that offer unless the customer opts out or an exception applies. Retailers are also required to continue to monitor these customers at least once every six months (or every 12 months, where the customer has previously opted out);  
• offer small customers who enter into contracts on or after 1 October 2026 at least one payment method which is commonly used and accessible, and for which no additional charges are imposed;
• check if customers are eligible for concessions at key times; and
• have effective processes on their website and by telephone for customers to switch to their deemed best offer.  

The Reforms also:

• increase the deemed best offer threshold from $22 to $50. A negative deemed best offer message, indicating that the customer could save by moving to another plan offered by that retailer, will now generally be required where the estimated annual saving exceeds $50; and
• increase the minimum debt a consumer can be disconnected for from $300 to $1,000. This aligns the disconnection threshold with the eligibility criteria for the new automatic best offer regime and seeks to ensure that customers with significant debt are first assessed for the deemed best offer, being the lowest applicable offer based on the customer’s annual usage history, before disconnection processes are considered.

The Reforms are also reflective of a broader shift in regulatory philosophy. Historically, Victorian retail energy regulation has focused on improving transparency and encouraging consumers to engage with the market through better information, comparison tools and disclosure obligations. Previous Victorian energy retail reform also focussed on informed customer decision making, such as the explicit informed consent obligations in relation to customer decisions surrounding their energy plan(s).

The new framework places greater responsibility on retailers to deliver consumer outcomes, with a particular focus on customers experiencing vulnerability, financial hardship or who are otherwise disengaged from the energy retail market. Included in this are several measures which the ESC states are designed to prevent the so-called ‘loyalty tax’ often paid by long-term customers who remain on legacy plans while newer customers access better offers.  

Midday Power Saver: Sending a market signal to consumers  

Separately, the Victorian Government has introduced of the Midday Power Saver, a time-of-use tariff required to be offered by retailers from 1 October 2026 and Victoria’s counterpart to the Solar Sharer Offer introduced through the national retail framework in participating jurisdictions. The scheme forms part of a broader market-wide effort to encourage electricity consumption when renewable generation is plentiful and system demand is comparatively low.

The Midday Power Saver was introduced by an Order in Council, published 8 September 2026, under section 13 of the Electricity Industry Act 2000 and must be offered by Victorian energy retailers with more than 1,000 domestic electricity customers across distribution networks in Victoria.

The Midday Power Saver consists of:

• a free usage window from 11am to 2pm every day, subject to a fair use cap of 24kWh after which an excess electricity usage charge applies;
• a solar soak period from 2pm to 4pm;
• a peak usage period from 4pm to 9pm; and
• an off-peak usage period from 9pm to 11am.

The objective of the Midday Power Saver is stated to encourage households that are able to do so to shift electricity consumption into the middle of the day and away from the evening peak, thereby supporting more efficient utilisation of the electricity network by making greater use of periods of high renewable generation.

The latest ESC’s draft Decision Paper includes consultation on several proposed consequential amendments relating to the implementation of the Midday Power Saver, including customer consent, disclosure and cooling-off arrangements.

What does this mean for organisations today?

As of the date of publishing, the ESC’s draft Decision Paper remains subject to consultation.

While the proposed amendments do not require immediate compliance changes, organisations wishing to respond to the draft decision should do so before submissions close on 23 October 2026.

Additionally, organisations should consider where the proposed reforms may have the greatest impact on their existing customer interface frameworks and consider implementing any appropriate uplifts, including the need to:

• review and update customer contracts and communications materials;
• ensure complaints handling and dispute resolution procedures match published processes;
• update record-keeping, audit and reporting processes;
• review the treatment of discounts and benefits under ongoing contracts and billing; and
• consider how the changes support new customer product offerings.

We’re here to help

To discuss what the new and proposed reforms mean for your organisation, or for assistance identifying practical next steps, please contact our Energy and Climate Change team. We can work with you to assess the potential impact of the reforms, prioritise key risks and opportunities, prepare a submission and ensure your organisation is well positioned for the evolving regulatory landscape.