Retail energy data reaffirms need for market reform

The Australian Energy Regulator (AER) has today released its Annual Retail Markets Report 2021–22 analysing key metrics from retailers in the financial year to 30 June 2022.

AER Chair Ms Clare Savage said the report has reaffirmed the need for ‘game-changer’ market reforms to deal with worsening debt for Australia’s most vulnerable energy consumers.

The report shows the number of customers holding debt over $2500 for more than two years had increased by 39% throughout the year.

It also showed that almost 50% of all customers in hardship programs are not meeting their ongoing energy usage costs, suggesting they are accumulating more debt while in the hardship program.

According to the analysis, customers on hardship programs consume up to 81% more electricity than average. As a result, customers on hardship programs in low-income households could pay between 1.2% and 3.7% more of their disposable income in electricity costs.

“The need to support customers experiencing vulnerability in the energy market, increase participation and improve affordability has never been greater,” Ms Savage said.

“Many of the debt and hardship metrics and indicators presented in our report may worsen over time because of the impact of rising wholesale gas and electricity costs in 2022.

“Some customers have already faced double digit price rises of up to 20% for electricity and 15% for gas in this current financial year.

“The “game-changer” reform we’ve called for in our Towards Energy Equity strategy released last month is to better balance cost and risk within the energy sector so that consumers experiencing vulnerability are identified early and get the support they need to improve outcomes.

“We need to stop the cycle of debt which, for too many people, becomes insurmountable,” Ms Savage said.

The Annual Retail Markets Report also shows a reduction in discounts available, reflecting the tough market conditions for retailers. However, savings still can be made by those who can shop around.

For example, the report shows that in September 2022, a customer moving from a standing offer to a market offer could have reduced their annual electricity costs by up to $404 in New South Wales, $120 in south-east Queensland, $122 in South Australia, $193 in Victoria, and $345 in the ACT.

“We encourage consumers to compare their energy bills using our free and independent Energy Made Easy comparison website and make a switch to a better offer if one is available,” Ms Savage said.

Note to editors

The AER’s Annual Retail Report 2021-22 covers jurisdictions that have adopted the National Energy Customer Framework (NECF) and are covered by the Retail Law and the Retail Rules – NSW, Queensland, South Australia, Tasmania, and the ACT. Although not part of the NECF, Victoria is also included in some sections of the report.

The AER launched its Towards Energy Equity strategy on 20 October 2022 which details 15 specific actions to tackle market complexity, remove barriers to participation, increase protections, and improve affordability for all consumers by reducing retailers’ cost to serve customers.

Issued date: 
30 November 2022
AER reference: 
NR 61/22
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