Consumer matters
Issue date

The Australian Energy Regulator’s (AER) Annual retail markets report 2022–23 reveals that more customers have accumulated energy debt since retail prices started rising last year.

From June 2022 to June 2023, prices for residential electricity increased by between 12% and 28% in the ACT, NSW, Queensland, South Australia and Tasmania, and between 5% and 11% in Victoria.

With energy affordability decreasing, the proportion of residential customers with energy debt increased from 2.5% to 2.9%, and the proportion on hardship programs increased from 1.1% to 1.4% – both at their highest levels in the past five years.

Although retailers are identifying vulnerable customers earlier or with less debt (the average debt on entry to a hardship program decreased by 29% for both electricity and gas), customers are still accruing debt while on a hardship program and the number of customers exiting hardship programs by clearing their debt is at its lowest level since 2018–19.

The trend was reversed for small businesses, with the proportion of small businesses with energy debt decreasing from 3.2% to 3.0% but their average debt increasing by 15%.

The report shows the proportion of residential electricity customers on market contracts (an advertised plan that the consumer chooses or negotiates with their retailer) at a five-year high of 79%, with customers able to save up to 11% on their annual electricity bills in some areas by switching from a standard contract (a plan given to the consumer by their retailer by default) to a market contract.

As the sharp rise in wholesale energy costs over 2022 flow-on to increased retail energy prices, AER Chair Ms Clare Savage urged consumers to shop around and seek help if they need it.

“We recognise that now is a difficult time as Australians face multiple cost-of-living pressures and that many will need continued support.

“We strongly advise consumers to regularly compare available offers through sites such as Energy Made Easy and Victorian Energy Compare, consider switching if they can find a better offer, and contact their retailer immediately if they are struggling with their energy bill.

“As part of the AER’s Better Bills Guideline, consumers should also see a ‘better offer’ message at least once every 100 days on the front page of their energy bill and should consider switching if they can find a better offer for their circumstances with their current or an alternative retailer,” said Ms Savage.

Ms Savage also acknowledged that the report highlights the importance of continued support for vulnerable energy consumers after energy ministers last week committed to progress work on a package of reforms proposed by the AER and industry to address energy vulnerability.

“This package of proposed reforms has been designed to address persistent challenges faced by consumers, including energy debt and hardship, and we thank stakeholders, energy ministers and jurisdictions for their commitment to progress this work,” said Ms Savage.

Note to editors

About the Annual retail markets report

The AER’s Annual retail markets report 2022-23 covers jurisdictions that have adopted the National Energy Consumer 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.

Supporting vulnerable consumers

The AER launched its Towards Energy Equity strategy in 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.

One of these actions is to advocate for sector-wide 'game changer’ reforms. In the past year the AER has brought together leaders from industry, government, market bodies, ombudsman schemes and consumer advocates to develop the Game changer package of proposed reforms presented to energy ministers last week.

At the Energy and Climate Change Ministerial Council meeting in Perth on 24 November 2023, ministers tasked their senior officials to further consider and consult on a consumer reform package based on the AER’s Game changer report, returning with proposals in mid-2024 to support consumers vulnerable to and experiencing hardship.