Mixed results in retail energy market

The 2015-16 Australian Energy Regulator (AER) report on the performance of the retail market shows a mixed result for Australia’s energy customers[1].

AER Chair Paula Conboy said overall energy affordability for 2015-16 is on par with the previous year, and while there are encouraging signs consumers are increasingly accessing assistance to avoid disconnection, more needs to be done to protect vulnerable consumers.

 “In most jurisdictions, the number of households with an energy debt fell, and across most jurisdictions there was a fall in the number of customers on payment plans, typically the first form of assistance offered to customers showing signs of payment difficulties,” she said.

“At the same time, we are seeing an increasing number of households entering hardship programs, which provide additional support beyond a payment plan, and improved success rates for completion of hardship programs.

“This is an encouraging sign that those struggling to pay their energy bills are getting the assistance they need from their retailers earlier, to avoid being disconnected.”

The AER has developed a new Sustainable Payment Plan Framework to provide further protection for vulnerable consumers.  The Framework sets voluntary standards for retailers when agreeing payment plans with customers, and will be effective from today for the customers of 14 retailers who implemented the Framework.  A list of those retailers is available on the AER website.

The AER is also reviewing the minimum amount consumers must owe before their energy services can be disconnected to ensure this protection remains appropriate.

The report also shows that energy bills remain a big expense for many people, with low income households spending between 3.8 per cent on electricity and 2.8 per cent on gas (New South Wales) and 5.2 per cent on electricity and 4.0 per cent on gas (South Australia).

“A key way to reduce the cost of energy is to shop around, so it is pleasing to see more people are taking advantage of market offers to save money on their electricity and gas. These are typically lower priced and can offer annual savings of up to $454 in some capital cities, depending on where you live and the fuel type. Customers should also check to ensure they are receiving any concessions they may be entitled to.”

“Our Energy Made Easy website is a simple, independent and free tool to help consumers compare all generally available electricity and gas offers in their area.”

The AER has also released its annual retail compliance report for 2015-16. During the year, 26 penalties were issued totalling $520,000 including six penalties for retailers failing to seek proper consent before switching customers and 20 penalties for distributors failing to provide the required protections to life support customers.

Ms Conboy said breaches of life support obligations are potentially catastrophic and have been the focus of campaigns to increase community awareness and improve compliance.

“Results are being seen in improved network systems and processes to safeguard against potential breaches as they continue to work towards improved compliance. The campaign continues in 2016-17.”

About the AER

The Australian Energy Regulator regulates energy markets and networks under national legislation and rules in eastern and southern Australia, as well as networks in the Northern Territory. Its functions include:

  • monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
  • setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
  • regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
  • operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers;
  • publishing information on energy markets, including the annual State of the energy market report, to assist participants and the wider community.
     

[1] These reports cover jurisdictions that have commenced the National Energy Retail Law. This includes Tasmania (electricity only) and the Australian Capital Territory from 1 July 2012, South Australia from 1 February 2013, New South Wales from 1 July 2014 and Queensland from 1 July 2015.

Segment: 
Issued date: 
22 November 2016
AER reference: 
NR 28/16