Is Keeping Warm Too Costly?

The Australian Energy Regulator (AER) has reported that electricity and gas disconnections are on the rise, and more consumers have entered hardship programs with higher levels of debt than at the same time last year.

By the end of March this year, more customers had moved on to payment plans with their retailer or into hardship programs that have more extensive support such as financial counselling, with the average electricity debt upon entry into a hardship program rising to $1,741, an increase of $183 on last year.

Of the 26,833 customers who entered hardship programs between January and March 2022, though, more than a quarter had more than $2,500 of debt, prompting the AER to call for energy retailers to step in sooner to help customers experiencing payment difficulties.

AER Chair, Ms Clare Savage said retailers must offer and apply payment plans to residential consumers requiring payment assistance as a first step and must have regard for a consumer’s capacity to pay where relevant.

“But now we are seeing higher debt upon entry to the more extensive hardship programs,” Ms Savage said.

“It’s crucial that retailers take appropriate action at earlier stages to ensure that customers are protected.”

On June 23 this year, AER held a forum with Financial Counsellors Australia to talk to retailers about their specific obligations to customers experiencing vulnerability, with a particular focus on early identification and on the customer’s individual capacity to pay when they identify payment difficulties.

“Anyone can experience hardship at any point in their lives,” Ms Savage said.

“It’s important to remember that customers are entitled to various payment plans and hardship programs under national energy retail law. “It’s also about understanding a customer’s individual capacity to pay, which can change quickly in this inflationary environment as households juggle increasing costs in food, transport and energy.”

AER data shows that consumers are still accumulating debt while on a hardship program.

More than 40 per cent of electricity and gas consumers on hardship programs did not meet their usage costs.

In other words, they were using more energy than they could pay for.

“A blanket or automated approach to payment difficulties by a retailer is not going to be enough to stop the cycle of debt,” Ms Savage said.

“It is vital that an early two-way conversation occurs between retailer and customers to have genuine insight into their situation and apply supports early such as rebates, concessions, or an agreed payment plan tailored to suit their needs.

“Retailers are required to ensure consumers in financial difficulty are given the full suite of protections in the Retail Law and Retail Rules, including protections outlined in their hardship policies.”

Every energy retailer is required by law to have a hardship policy in place that identifies and supports residential customers to overcome energy debt.

Hardship programs, as opposed to concessions and payment plans, take the support further by providing a more tailored and face-to-face approach, such as financial counselling and energy efficiency audits.

Visit www.energymadeeasy.gov.au for free and independent energy comparisons as well as information and advice on the obligations of retailers and what questions customers should ask to get the support they need.

• Topics:

• My House My Home
• Cost Of Living