Issue date
AER reference
NR 36/20

Households and small businesses struggling to keep up with energy bills will continue to be protected by the Australian Energy Regulator (AER) as energy debt increases during the COVID-19 pandemic.

The AER today released its Statement of Expectations 3, which extends protections until the end of March 2021 for customers in financial stress in the face of COVID-19.

This comes as AER data shows rising energy debt in households and small businesses over the last six months, but with fewer customers accessing formal payment plans and hardship programs.

AER Chair Clare Savage emphasised the need for retailers to ensure that customers currently on deferred debt arrangements are transferred to sustainable payment plans or even hardship programs where appropriate.

“We want to see retailers taking proactive action to assist their customers so it’s critical that customers don’t ignore the calls, emails, texts and letters from their retailers.

“If you are worried about paying your bill, talk to your retailer about your energy debt even if you can’t afford to pay anything right now. They will work with you and you will not be disconnected.

“It is essential that if customers can pay something towards their bills, they do, even if it’s just a few dollars a week right now. This will help chip away at their debts and ensure energy businesses can continue to provide maximum support to those customers who are struggling,” Ms Savage said.

Since March the AER’s Statement of Expectations has been working to protect consumers with 37,000 fewer disconnections and 154,000 fewer referrals for debt collection compared to the same period (April til end of September) last year. At the same time, complaints to ombudsmen schemes has significantly reduced across most jurisdictions.

New data supports the AER’s sharper focus in its Statement of Expectations 3 on sustainable payment plans and getting customers into hardship programs. From the end of March 2020 to 19 October 2020:

  • Household electricity 90 day debt grew by $15 million, a 14 per cent jump, with the average amount of debt owed up 17 per cent to more than $1,100.
  • Total debt for households on hardship programs grew by more than $9 million to almost $114 million, with average amount of debt growing by 17 per cent to $1,390. 
  • Total amount of 90 day debt for small business rose 45 per cent, an increase of $13 million to almost $42 million, and small businesses on average owed $2,690, up 40 per cent.
  • Despite increases in 90 day debt, there was a 15 per cent drop in customers on payment plans and a 7 per cent drop in hardship arrangements.

The AER’s Statement of Expectations 3 expects retailers to offer payment plans or hardship arrangements to struggling customers, which could include a period in which no payment is made.

Retailers are also expected to consider actions like lower cost plans to minimise their customers’ ongoing energy costs along with the volume of any outstanding debt. Retailers are also expected to:

  • Not disconnect residential customers in financial stress who are in contact with the retailer about their debt, and small business customers who are adhering to a payment plan.
  • Process an order for reconnection immediately on contact from a disconnected customer and waive disconnection, reconnection and contract break fees.
  • Defer referrals to debt collection agencies of residential customers in financial stress and who are in contact with their retailer about their debt. Small businesses that are adhering to a payment plan should also not be referred to debt collection agencies for recovery actions or credit default listing.

Note to editor

The AER introduced the Statement of Expectations at the start of the pandemic in March this year, and this is the third update.

The Statement of Expectations 3 will apply from 1 November 2020 until March 31, 2021 in Queensland, New South Wales, Australian Capital Territory, South Australia and Tasmania. AER data also covers these jurisdictions.

The AER will continue to monitor the impacts of the pandemic on energy consumers, and retailers, and other elements of the energy industry.

About the AER

The Australian Energy Regulator (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.