The regulator has called on retailers to provide better support through hardship programs for customers tackling energy debt.
It comes after a 12 per cent rise in the average household debt for both electricity and gas was seen since last year, despite power prices continuing to fall across most of the country. Debt also grew for customers on a hardship policy by 21 per cent over the same period.
In its latest report, the Australian Energy Regulator (AER) found that 182,655 households were paying off debt, an increase of 8,444 from the previous year, largely due to the impact of COVID-19.
Despite a rise in energy debt, the AER stated that customers on a payment assistance program dropped from 72,882 to 65,855 in 2020-21. This drop has led to questions being raised over the value of these programs that are in place to help Aussies better manage their debt.
The regulator also noted that residential electricity disconnections fell by more than 26,000 during 2020-21, thanks to new framework being introduced.
The AER released a ‘Statement of Expectations’ to power companies during the pandemic that outlined a list of protections that should be offered to consumers experiencing financial hardship.
AER Chair Clare Savage explained that retailers have a responsibility to identify and support vulnerable customers through a range of means.
“It’s not surprising that energy debt rose due to the effects of the COVID-19 pandemic, and not surprising to see an increase in people on payment plans to manage their bills,” she said.
“But we are not out of the COVID woods yet, and with our data showing more than 262,000 now paying off some form of energy debt, it does raise questions as to why there is a drop in the number of customers entering hardship programs.”
Household energy prices have been going down. But with average energy debt going up, having the right customer supports in place is more important than ever. Find out more by reading our Annual Retail Markets Report 2020-21. Head to https://t.co/jRE6I3AxYF. pic.twitter.com/aek6lVdLSo
— AER (@aergovau) December 1, 2021
Ms Savage noted that households on hardship programs were in the most debt, and that more needed to be done to combat rising arrears.
“Residential electricity customers on hardship programs have $500 more energy debt, compared to other residential customers with debt,” she said.
“Really effective retail hardship policies and customer access to tailored, structured hardship programs are now more crucial than ever as people work their way out of vulnerable situations that this pandemic has put them in, whether that be financially, mentally or physically.”
The federal government has also backed the AER’s position on improving customer support.
Energy Minister Angus Taylor said: “Energy costs are continuing to fall. This is good news for Australian families and small businesses. However, as providers of an essential service, it is critical that energy companies step up to deliver necessary support to any customers doing it tough.
“Given that energy prices are continuing to come down, the Government encourages customers who are not happy with their current offer to shop around.”
Alinta Energy: “You’re not alone”
Rather than burying your head in the sand, Australians who are doing it tough are urged to get in contact to discuss their options, Alinta Energy’s Managing Director and CEO Jeff Dimery said.
“The thing that we’ve found is once people engage with us, there’s a whole range of options that we can offer to help them manage their financial hardship,” he said. “We’re continually looking at ways to improve our contact with those potentially experiencing financial hardship, but we also know that some people might feel that it can be tricky or embarrassing to ask for help.
“To the people that feel that way we say you’re not alone, a lot of people are in the same situation, so please contact us because we want to make sure the right support measures are in place for you.”
Your rights as an energy customer
All power retailers have stringent customer hardship policies that outline rules enforced by energy regulators like the AER and the Essential Services Commission (ESC) in Victoria. Stipulated within these policies are a number of provisions that help protect vulnerable customers struggling to pay their bills.
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