AER report shines spotlight on South Australian energy market

The Australian Energy Regulator has released its first annual report on the performance of the retail energy market, under the National Energy Retail Law which started in South Australia on 1 February 2013.

The report looks at retail market and retailers’ performance. The report finds that 13 retailers supply energy to small customers with over 80% of customers supplied by the three largest retailers. Switching rates are high but almost 20% of small customers are still on standard contracts, despite market contracts often offering better value.

In respect to retailer performance, a range of indicators show satisfactory performance by most retailers. The report highlights a couple of areas of potential concern, particularly, the fact that all but three retailers reported their failure to meet South Australian service standards for responding to written inquiries and telephone calls. Strategies for improving performance have been submitted by retailers and the AER will be pursuing this over the coming period.

During 2012-13, over 50 000 complaints were made to retailers by South Australian customers, with billing, prices, and overcharging the most common cause for complaint. Around a quarter of these complaints went onto the energy ombudsman.

“Energy retailers can do more to improve the service they deliver to South Australian customers. Responding promptly to customer calls and inquiries should be a focus for retailers. We will follow up and will be looking for signs of material improvement,” AER Chairman Andrew Reeves said.

The report also looked at average energy debt levels in South Australia and found that, at the end of June 2013, around 40,000 electricity customers (just over 5 per cent) had amounts owing to their retailer for 90 days or more, with the average debt being around $700. In gas, 17,000 customers (or 4 per cent) had debts, with the average debt $265.

Energy retailers are responding to this by providing customers with assistance in managing their bills—at the end of June around 3 per cent of electricity customers (20 906) and 1.5 per cent of gas customers (6015) were on payment plans and an additional 8500 customers were on hardship programs. The total number of residential electricity and gas disconnections for non-payment was slightly lower than for the previous year (14,104 compared to 14,296 in 2011-12).

Mr Reeves said that the 2012-13 report highlighted the importance of this assistance to households.
“The Retail Law provides important protections for consumers. Energy retailers have to offer payment plans to customers who are having difficulty paying their bills, or more comprehensive hardship assistance for eligible customers,” Mr Reeves said.

The report also features findings on energy affordability, and the impact of energy bills on the budgets of benchmark households in South Australia. At June 2013, annual electricity bills for a benchmark low income South Australian household in receipt of an energy concession came to $1733—around 6 per cent of their annual disposable income. This assumes that a low income household has the same level of usage as other South Australian households of comparable size. The annual electricity bills of benchmark middle and high income households in South Australia came to $2162 and comprised only 1.8 per cent and 0.7 per cent of disposable income respectively. Annual gas bills came to $827 for a benchmark low income household receiving a concession, or 2.8 per cent of disposable income. For middle and high income households this represents 0.8 and 0.3 per cent of disposable income respectively.

“Customers who are having trouble paying their energy bills should contact their retailer as soon as they know they will have a problem. Early assistance can help customers avoid building up higher levels of debt, avoid extra fees or having their service disconnected.”

Mr Reeves also said that customers should consider shopping around and switching offers. The AER’s energy price comparison website, Energy Made Easy, is an independent free and easy to use tool to help consumers compare different energy offers.

“The difference between the highest and lowest priced offer in any given area can be several hundred dollars over a year, so clearly it can pay to shop around.” Customers can also talk to their current retailer to see they if can get a better offer.

“The AER will continue to closely monitor retailers’ performance on hardship issues to ensure that customers are getting appropriate access to payment plans and hardship assistance. We are also commencing a broader review of retailers’ hardship programs in early 2014,” Mr Reeves said.

To compare energy offers, visit www.energymadeeasy.gov.au

Issued date: 
26 November 2013
AER reference: 
NR 029/13
Contact: 
Ms Meg Macfarlan, AER media unit 02 6243 1317 0408 995 408