What to do if you can’t afford your energy bill

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Sometimes things just don’t go your way, and you’re left wondering how you’re going to pay that next bill. That’s a question made all the more difficult when you don’t even know how much that bill is going to be! But that’s how energy bills typically go. The fact that energy bills are rarely predictable means it’s difficult to plan ahead, and if your finances aren’t where you’d like them to be, that’s a classic recipe for bill stress.

If you’re not sure how you’re going to pay your next power bill, and wondering what will happen if you don’t, Canstar Blue has produced this guide, covering:

But first, don’t bury your head in the sand

It’s never fun owing money, and no one likes to be bombarded with phone calls chasing up the debt. In the case of energy bills, the most important thing is that you don’t bury your head in the sand and hope the problem goes away. Energy companies are not always the bad guys you may think. By picking up the phone and explaining your situation, you may be pleasantly surprised by the support available to you. It is crucial that you communicate with your provider and work out a way to pay what you owe. You’ll feel better for it.

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I can’t afford my energy bill, what should I do?

As soon as it becomes obvious that you won’t have the money available for your next energy bill, pick up the phone or go online and contact your retailer to explain the situation. The earlier you can advise your energy company that you’re short on cash, the better. If this is the first time that you’ve struggled to get the cash together, chances are your provider will simply grant you an extension of a week or two. If this is not the first time, your provider may want to talk to you in more detail about your payment options.

Clock calendar

What happens if I don’t pay my energy bill?

If the bill due date comes and goes without you paying, your energy company will likely send you a reminder within a couple of days, via email or post. This is when you first start to see the red font and capital letters demanding payment! You’ll also incur a late payment fee of around $10-12.

Aside from your energy provider, there may also be consequences in regards to your bank account. Keep in mind that:

  • If you have a direct debit set up but not enough money in your account to cover the bill, your bank may still allow the payment to go through, potentially sending you into an unplanned overdraft. This is likely to mean you incur a fee from your bank.
  • On the other hand, your bank may reject the payment to your energy provider and return the money to your account. This could also see you incur a fee from your bank.

Also keep in mind that, if you have an energy plan with a pay on time discount, you are likely to lose this discount and consequently need to pay more.

What happens of you keep missing your bills?

It’s common for energy providers to grant a short extension to customers who need some extra time to pay their bills. But if the problem becomes more serious and bills are regularly missed, customers may be placed on a hardship program where customer and provider agree a payment schedule to clear the debt owed.

If you continue to ignore your bills, your energy provider may issue a disconnection warning, at which point things are getting really serious.

Energy companies may also involve debt collection agencies to make sure that debts are recovered.

Lights off

Will my power be cut off if I don’t pay my bill?

Ultimately, your energy provider has the power to disconnect your property from the energy network, but that’s a last resort no one wants. Your home will only be disconnected if you refuse to engage with your provider and continuously fail to pay your bills. Energy providers must comply with strict guidelines set out by industry regulators when it comes to dealing with customers in financial hardship, and cannot disconnect customers who are taking part in a hardship program and making an effort to pay their debt.

Does not paying my energy bill hurt my credit score?

Yes. Credit reporting agencies collect information on things like how many loans or credit cards you have, as well as whether you pay your bills on time. Not paying your energy bills on time is likely to negatively impact your credit rating. Some energy companies conduct credit checks of customers before allowing them to sign up.

Piggy bank cash

What does a hardship policy involve?

While customers can request to join their energy company’s hardship policy, it’s more likely that the provider will suggest it when a customer is clearly having issues keeping up with their bills. So, what does a typical hardship policy involve? To find out, we’ve used the example of Origin Energy’s ‘Power On Program’ (other retailers have different names for their hardship policies).

“Power On is our way of helping customers experiencing hardship to manage their energy usage and bills. Power On helps us to work with our residential electricity and natural gas customers to make debt collecting and disconnecting someone’s energy supply our last resort,” Origin says of its program.

Origin says it will recommend customers speak to a staff member about the Power On Program if they have:

  • a history of late payments
  • broken payment plans
  • requested payment extensions
  • received a disconnection warning notice
  • been disconnected for non-payment

Origin says customers may be required to provide supporting evidence of their financial hardship to join the program. Once accepted, Origin says it will tell customers if they could be saving money on another plan, inform them of any government concessions that are available, offer tips to reduce energy usage, and discuss payment options. Crucially, the company won’t charge late payment fees once a customer joins the program.

However, Origin is clear that, once a payment plan has been agreed, customers must make all scheduled payments in full and on time.

Assuming the plan has worked successfully, customers will complete the program and return to normal billing terms. Failing to comply with the program could eventually lead to Origin going back to its normal debt collection process, with disconnection the final option if bills continue to go unpaid.

Energy company hardship policies are approved by the energy regulators to ensure that providers make adequate effort to support customers and that disconnections are a last resort only.

How to be better prepared for energy bills

This is a tricky one because energy bills are notoriously difficult to predict, but there are some things you can do:

  • Download your energy provider’s app: Most of the big energy companies have useful apps that either monitor your energy usage (if you have a smart meter) or at least provide bill predictions so you know roughly how much your next bill will be.
  • Look at prepaid power plans: They’re rare, but some smaller providers have prepaid plans whereby you purchase energy in advance and therefore have a tighter grip on your spending. However, these offers are not for everyone and you’ll need to be constantly engaged to ensure you don’t pay too much.
  • Ask your provider about bill smoothing: Most energy providers will happily set you up on a bill smoothing plan, especially if you’re having trouble paying bills on time. ‘Bill smoothing’ means you pay the same agreed amount each month, so you avoid the peaks and troughs of seasonal energy usage and know what you have to pay each time.
  • Make sure you’re not paying too much in the first place: Lots of people cut back on their energy usage to reduce bills, but if you’re on a bad energy deal, you’ll already be paying too much. Find a cheap plan and you’re a step closer to making power bills more affordable.

And that’s it. We hope this guide helps alleviate any stress you’re suffering about your power bills. It’s important to pay your bills as soon as you can – it’s your responsibility and there are consequences for not doing so – but if you’re struggling, your provider is obliged under National Energy Retail Law to make every effort to support you before the last resort of disconnecting your home. Be sensible. Talk to your retailer. And you’ll be able to manage your bills.

Electricity Prices Compared

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Image credits: Yevhen Prozhyrko/Shutterstock.com, Doucefleur/Shutterstock.com, Antonio Guillem/Shutterstock.com, Milleflore Images/Shutterstock.com

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