AER report reveals rise in energy debt for small business and households

A report from the Australian Energy Regulator (AER) reveals thousands of households and small businesses in energy debt and struggling to pay bills during the COVID-19 pandemic.

The AER’s Annual Retail Markets Report 2019-20 shows a sharp rise in energy debt since March this year, with debt owed by small businesses growing from $35 million in March 2020 to $45 million in June 2020.

AER Chair Clare Savage said it was clear that the pandemic had a major impact on customers and their ability to pay for essential services such as electricity and gas.

“This report really underscores the struggle it has been for many customers to get on top of their energy bills during the pandemic,” Ms Savage said.

“If you are struggling to pay your bills talk to your retailer about your debt – even if you can’t afford to pay anything right now. You won’t be disconnected, and your retailer will work with you to set up a plan and help you start paying off your debt.”

In a positive sign for consumers, the report shows a marked decline in complaints about energy retailers. There were 29 per cent fewer complaints to retailers from customers and 26 per cent fewer complaints to ombudsmen from customers since 2018-19.

The report also shows electricity prices have been falling, with the default market offer set by the AER to cap high standing offer prices in south east Queensland, NSW and South Australia lowering prices for some customers by up to 10 per cent in 2019-20. Customers on market offers also benefited from lower prices in most jurisdictions.

However, energy affordability was still a concern for consumers, particularly during the pandemic. COVID-19 data supplied by retailers to the AER during the pandemic shows:

  • long-term residential electricity debt increased by 21 per cent between 31 March and 2 November to $124.5 million,
  • almost 60,000 households took advantage of retailer offers to defer paying energy bills.

Other key findings include:

  • Gas retail market contract prices eased in 2020 in Queensland and Victoria, but remained elevated elsewhere.
  • Smaller retailers increased their share of customers in all electricity and gas market segments, providing greater competition in the retail market.
  • The proportion of residential electricity customers on market contracts increased to 76 per cent in 2019-20, indicating that more customers were shopping around for better deals.
  • High call volumes at the start of the pandemic prompted retailers to engage with customers through their websites, apps, email or online chat.

Ms Savage said there was an opportunity for consumers who engaged in the market to make considerable savings.

“With the combination of falling prices, smaller retailers providing competitive offers, and new retailers entering the market it’s a good time for customers to shop around,” Ms Savage said.

Visit the AER’s free and independent Energy Made Easy website to find the right energy plan: energymadeeasy.com.au

The AER introduced the Statement of Expectations (SOE) in March this year to set out what was expected of energy businesses during the pandemic, and particularly to provide protections for customers to avoid disconnections and referral to debt collectors.

The most recent SOE will continue until the end of March 2021.

Note to editors

The report covers jurisdictions that have adopted the National Energy Customer Framework (NECF) and are covered by the Retail Law and the Retail Rules – New South Wales, Queensland, South Australia, Tasmania, and the Australian Capital Territory. Although not part of the NECF, Victoria is also included in some sections of the report.

About the AER

  • The AER works to make all Australian energy consumers better off, now and in the future.
  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.
  • We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.

 

Issued date: 
30 November 2020
AER reference: 
NR 46/20
Contact: 
AER Media 0466 409 921 media@aer.gov.au