Energy affordability problems lead to hardship and disconnections: AER retail report

Rising electricity prices are leading to increased numbers of consumers falling behind on power bill payments and struggling to complete financial hardship assistance programs.

The Australian Energy Regulator’s (AER) Annual Report on Compliance and Performance of the Retail Energy Market 2016 – 17 (the report) shows increased numbers of electricity disconnections, higher levels of energy debt held by those customers not in a formal hardship program and fewer customers successfully completing hardship programs than in the previous year.

“At a time when energy affordability is a serious concern for many Australian households, it is more important than ever that customers have the confidence that the AER is closely monitoring the performance of energy retailers to ensure they are meeting their obligations to customers,” said AER Chair Paula Conboy. “This report is one of the ways we provide that confidence.”

Across all jurisdictions, electricity debt levels have increased and electricity disconnections increased in Queensland, the ACT and South Australia, but decreased in New South Wales. In addition, while there were fewer gas disconnections in this reporting period than the previous period, 1083 more electricity customers were disconnected than last year.

“The increase in the number of electricity customers being disconnected is troubling: disconnecting a customer is a serious measure and we consider that this step should only be taken as a last resort by retailers.” Ms Conboy said.

The fact only 27 per cent of customers who exited retailer hardship programs in the last year did so successfully raises questions about the effectiveness of those programs. The rate of customers exiting a hardship program due to exclusion - being unable to meet agreed repayment conditions - across both electricity and gas increased from the previous year.

Ms Conboy said retailers’ compliance with their hardship obligations will be an area of close attention for the AER in the coming year:

“We are reviewing retailer hardship policies to ensure that all retailers are identifying, engaging with, and providing appropriate assistance to customers. Hardship policies need to provide real assistance to more consumers. We will use all the tools available to us to ensure retailers are meeting their obligations to customers in this very important area.”

A more positive finding of the report was that in all jurisdictions other than the ACT there was an increase in the number of customers on gas and electricity retail market contracts, which are generally cheaper than standing offers -  68 out of 100 electricity customers and 79 out of 100 gas customers were on market retail contracts.

“Customers feeling the impact of last year’s price increases and the recent rise in prices after July 1 this year can visit our Energy Made Easy price comparator website to see what offers are available in their area and ensure they are getting the best possible deal. Energy Made Easy is a simple, independent and free tool that helps consumers compare the generally available electricity and gas offers in their area.”

Energy Made Easy currently contains 2161 residential market offers and 1621 small business offers across all Retail Law jurisdictions.

 “It is also important to seek assistance from your retailer as soon as you need help. Retailers are required to provide assistance in the form of payment plans and hardship programs, but can also let you know about concessions you may be eligible for,” Ms Conboy said.

In addition to providing information to help customers engage in the market, the AER monitors businesses’ compliance with the Retail Law and Rules to ensure they are meeting their obligations to customers. Where that is not occurring, enforcement action may result. The Report highlights compliance and enforcement outcomes for the year, which included two court enforceable undertakings and 21 infringement notices (totalling $420 000 in penalties) relating to alleged breaches of the Retail Law and Rules.

For a better energy offer, visit Energy Made Easy.

Issued date: 
22 November 2017
AER reference: 
NR 36/17
AER Media 0466 409 921