Victoria’s energy regulator has spent the past year sending a simple message to the market: if you make vulnerable customers pay for your complexity, you will pay for it instead.
In 2025, the Essential Services Commission issued $24.5 million in penalties to electricity and gas retailers – the highest annual total on record, capped by a $17.6 million court-ordered fine against Origin Energy, the largest in Victorian energy history. The numbers are striking, but they are not the main story.
What matters is what the commission is building around those fines.
From October 2026, Victorian retailers will have to automatically move hardship customers and those in deep arrears onto their cheapest available plan, and they will be barred from disconnecting a customer for non-payment until their debt reaches $1,000, up from $300, under new retail rules. Together, the enforcement and the rule changes amount to a deliberate shift in regulatory posture: away from information and choice, and towards default protections that assume markets will fail the people who most need energy.
It is a case study in using enforcement and rule-making in concert, with vulnerability as the organising principle.
The hinge moment: Origin Energy in the Supreme Court
In March 2025, Justice Michael Osborne ordered Origin to pay $17.6 million for widespread breaches of Victoria’s energy rules affecting hundreds of thousands of customers, after the company admitted to systemic failings in a case reported by The Guardian. These included inadequate support for 6,806 customers in payment difficulty, missing “best offer” messages to more than 655,000 customers, and lapses in maintaining life support information for 10 customers.
These are not technicalities. In Victoria’s regime, obligations around hardship, best-offer information and life support customer information sit at the heart of consumer protection.
“If penalties are not of sufficient magnitude, even compliant firms may drop their standards when the cost of compliance is significant.”
-Justice Michael Osborne,
Supreme Court of Victoria
Justice Osborne’s reasoning went beyond Origin. He warned that if penalties were not “of sufficient magnitude”, other energy retailers – including those currently complying – might “drop their present standards, particularly in circumstances where the cost of compliance is significant”. The court was recalibrating the cost-benefit calculation for every retailer in the state.
The enforcement year underscored that the problem was market-wide, not confined to one retailer. AGL, Engie, Momentum Energy, Pacific Blue, CovaU and EnergyAustralia all paid penalties for conduct ranging from mishandled billing complaints to failures in family-violence protections, as set out in the commission’s fines summary. When vulnerability intersects with billing or marketing, the commission is increasingly willing to treat it as high-risk conduct, not peripheral compliance.
Gerard Brody, the commission’s chair since August 2024, framed the record penalty total in deterrence terms: “We’ve had a year of record-breaking fines in 2025 which should send a simple message – cutting corners on consumer protections is not just unacceptable, it’s costly. Retailers need to invest in getting things right the first time.”
The choice to pursue Origin in the Supreme Court, rather than through administrative penalties alone, is best understood as part of that signalling strategy. Courts amplify regulatory expectations.
When strong protections still fail: the Payment Difficulty Framework gap
On paper, Victoria already had the toughest energy hardship protections in the country.
The Payment Difficulty Framework, introduced in 2019, was designed to help residential customers avoid debt, make it easier to pay ongoing usage and arrears, and make disconnection a genuine last resort. It is often held up as a model in other jurisdictions’ consultations.
Yet by 2024-25, audits and ombudsman data pointed to a persistent structural problem. Despite the framework, the number of customers in arrears was rising year-on-year, many on tailored assistance exited hardship programs because payment plans were unsustainable, and a large cohort remained on higher-priced offers even where cheaper plans were available.
In other words, the framework was working procedurally but failing on price outcomes.
The commission’s own analysis is blunt: a regime that gives customers clearer rights does not necessarily deliver affordable bills if those customers stay on expensive tariffs. For people in hardship, expecting them to compare and switch plans at the right moment – while juggling rent, food and other debts – is a choice architecture problem, not a willpower problem.
Consumer groups had been making this point for years. A CHOICE analysis noted Origin’s “systemic failures in support for hardship customers, best-offer messaging, overcharging and life-support obligations”, and highlighted how often customers “leave money on the table” by remaining on high-priced legacy plans.
When complexity is high and financial stress is acute, disclosure and choice do not reliably protect the people who most need protection.
The underlying insight is transferable across regulated markets: when complexity is high and financial stress is acute, disclosure and choice do not reliably protect the people who most need protection. In those settings, regulators start to look for ways to change defaults, not just information.
The October 2026 rule changes: defaults for the vulnerable
The commission’s answer in Victoria is a package of Energy Retail Code of Practice changes taking effect in October 2026. They represent a coordinated attempt to move the burden of optimisation from the customer to the retailer, at least for the riskiest segments.
Specifically, the disconnection threshold will rise from $300 to $1,000. Retailers will not be able to initiate disconnection for non-payment until a customer’s arrears reach four figures. This resets how the system treats disconnection, buys time for financial counselling and hardship arrangements, and reasserts that losing energy supply sits at the end of an escalation path.
But the centrepiece of the package is a new requirement to automatically move certain customers onto their retailer’s cheapest offer. This will apply where a customer is receiving hardship assistance or has been in arrears for at least three months owing $1,000 or more.
This means customers in hardship or deep arrears will no longer need to identify, request, and switch to a cheaper plan. The retailer will be required to do it for them. The commission explains in a release: “If an energy retailer is supporting someone in financial hardship, moving them onto the cheapest plan is a simple, considerate step. It’s contradictory to be helping someone in hardship while also charging them unnecessarily high rates.”
This is the most significant shift. It abandons the assumption that informed choice is the primary protective mechanism for the most vulnerable cohort. The regulator is writing a “good default” into the code and making it enforceable.
Tackling the loyalty tax and removing friction
A related rule targets the “loyalty tax”, moving customers on the same plan for four years or more to a more reasonable rate. Prices, as the commission notes, “stay sharp for customers who compare deals but creep up for those who stay on the same plan.” The new rule forces retailers to stop relying on that creep.
Retailers will also be barred from conditioning cheaper plans on direct debit or e-billing uptake, eliminating friction to access best offers.
Taken together, the changes are expected to deliver average annual savings of around $225 on electricity and $182 on gas for affected cohorts.
Consumer advocates have framed the package as “the strongest energy consumer protections of their kind in the country”, with the Consumer Action Law Centre (Consumer Action) arguing that increasing the debt threshold “will help prevent many Victorians from falling into hardship or feeling pressured to pay an unaffordable payment plan, for fear of being disconnected.”
Posture, politics and institutional change
Gerard Brody’s appointment as commission chair after leading Consumer Action does matter. His public language on vulnerability is more direct, and his experience as a consumer advocate shapes how the commission frames enforcement and rule changes. His background as a consumer lawyer leading an economic regulator is not standard practice; it signals that the relationship with industry will be different.
But the shift in posture is also institutional and political.
Politically, cost-of-living pressures have pushed energy affordability to the centre of Victoria’s policy agenda. Consumer advocates point to what they describe as “record profits – with over $1.64 billion made by the top three retailers in just the 2023-24 financial year” alongside rising energy debt, arguing that this combination creates a clear mandate for intervention. A regulator attempting these reforms without ministerial backing would face a very different environment.
Institutionally, the commission has spent six years operating the Payment Difficulty Framework and accumulating data on what works and what does not. It has statutory scope to amend the Energy Retail Code of Practice and seek court-backed penalties for serious breaches. That combination – political cover, evidence base, and legal powers – makes an assertive posture possible.
Nationally, the Australian Energy Market Commission has been working on its own hardship reforms under the National Energy Customer Framework, frequently referencing Victoria’s framework in consultation material. The Victorian reforms now move beyond the national minimum, particularly on automatic cheapest-plan switching and disconnection thresholds, and are being watched closely in other jurisdictions as a live experiment.
With Stage 1 consumer reforms applying from February 2026 and deeper structural changes following in October, Victoria is entering a live test phase for vulnerability-led regulation.
What regulators elsewhere can take from Victoria
Victoria’s approach in 2025-26 offers several lessons that travel beyond energy and beyond one state.
Enforcement and rule-making should be treated as a combined toolkit. The commission used large, public penalties – including a Supreme Court judgment – to reset incentives and signal that hardship and life-support obligations are high-penalty territory. In parallel, it rewrote the code to reduce reliance on consumers’ ability to navigate complexity. Punishing past breaches and redesigning future defaults are two halves of the same strategy.
Choice has limits as a protection mechanism in high-stress contexts. The Payment Difficulty Framework showed that even strong information and process rights will not protect customers who cannot, in practice, take advantage of them. Victoria’s shift towards automatic protections and good defaults for defined vulnerable cohorts is an explicit acknowledgement of those limits. For regulators in other sectors – from consumer finance to telecommunications – this is instructive.
Leadership and institutional setting interact. Brody’s consumer advocacy background influences how the commission uses its powers. But that posture depends on statutory levers, political support and implementation data. Regulators elsewhere considering similar moves will need to assess not only who leads their organisations, but also whether their legislative frameworks and ministerial expectations support assertive use of defaults and penalties.
Implementation is a credibility test. Automatic cheapest-plan switching sounds straightforward; in practice it requires retailers to overhaul billing systems, product catalogues and compliance monitoring. The commission has given industry more than a year to prepare. If the rules bed in cleanly, with clear benefits for hardship customers and manageable compliance costs, the case for replication strengthens.
From protection to prevention – and a live test of credibility
Victoria’s energy regulator is not simply tightening rules at the edges. It is trying to move from a model centred on helping consumers navigate to one focused on preventing foreseeable harm.
Record penalties in 2025, a landmark Supreme Court decision, and a 2026 code rewrite all point in the same direction: hardship and vulnerability obligations sit at the core of how the commission judges retailer conduct.
The live question for regulators elsewhere is this: in your own markets, where is vulnerability so entrenched – and complexity so high – that relying on disclosure and choice is no longer credible, and where should you be designing defaults instead?
The answer, and how convincingly it is implemented, will do as much to shape regulatory credibility in the next decade as any new statute. Victoria is about to show what that looks like in practice.
