Can you switch energy providers when in debt?

At a time where energy prices are constantly changing, some Aussie households may be wondering: can you switch energy providers if you’re in debt? 

In this article, Canstar Blue explores if you can change your energy provider if you owe money on your power bill.

Can you switch energy providers if you’re in debt?

It’s possible for customers to switch energy or gas providers, even when in debt. However, energy companies are entitled to carry out credit checks on new customers. 

It’s important to remember that changing energy providers won’t automatically eliminate any existing debt. Account holders must still make arrangements with their current power company to settle any outstanding payments.

What does a credit check involve?

If an energy retailer you’re considering requires a credit risk assessment, they will need access to some of your personal and financial information. This typically includes details such as past credit applications, default information and credit infringement history. 

You’ll need to give the new energy retailer permission to check your credit history. After the assessment, the company will inform you if switching is an option, provided you meet their terms and conditions.

You can check your credit score for free here

Can I switch energy suppliers if I owe money on my bill?

If you owe money on your energy account and are considering switching providers, you may face several challenges. Your current provider can legally pursue you for the amount owed and may even use a debt collector. Switching to a new provider won’t erase your debt, but in some cases, you might be able to switch while continuing to pay off your previous bills.

If you’re having difficulty paying, it’s often best to contact your company’s hardship team. They may offer arrangements to help you pay down your outstanding bills. The Australian Energy Regulator (AER) implemented the Customer Hardship Policy Guideline in 2019, which requires energy retailers to provide more flexible payment plans and options for customers struggling to pay their bills.

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What is the Customer Hardship Policy Guideline?

Under Australia’s National Energy Retail Law, energy providers must have customer hardship policies published on their websites. The AER’s Customer Hardship Policy Guideline outlines the obligations energy retailers have towards customers including:

• Identifying customers experiencing financial hardship.
• Providing information about a retailer’s customer hardship program to all customers, including those with diverse communications requirements.
• Making contact information and the hardship policy easily accessible.
• Providing options for customers in hardship, including relief schemes, payment plans, and strategies to reduce energy consumption.
• Informing customers of services they may be eligible for, such as energy rebates, relief payments or financial counselling. 

If you believe your consumer rights have been violated, you can also reach out to the Energy Ombudsman.

How do I contact the Energy Ombudsman?

Depending on where you live, the Ombudsman can provide impartial advice on your options to help resolve the issue.

Here are the contact numbers for the Ombudsman in each state:

• NSW: Energy & Water Ombudsman NSW (EWON) – 1800 246 545
• VIC: Energy & Water Ombudsman VIC (EWOV) – 1800 500 509
• QLD: Energy & Water Ombudsman QLD (EWOQ) – 1800 662 837
• SA: Energy & Water Ombudsman SA (EWOSA) – 1800 665 565
• WA: Energy & Water Ombudsman WA (EWOWA) – 1800 754 004
• TAS: Energy Ombudsman TAS (EOT)  –  1800 001 170
• ACT: ACT Civil and Administrative Tribunal – (02) 6207 1740

How can I reduce my energy bill?

If you’re willing to change a few bad habits, saving money on electricity and gas can be pretty straightforward. Simple steps  you can take to save money on energy bills include choosing energy efficient appliances, improving your home’s insulation and keeping an eye on power-draining appliances such as air conditioners. 

Contacting your energy provider and asking if there’s a better deal available, as well as comparing electricity and gas providers available in your area, can also go a long way in helping cut power costs. You can compare electricity offers in the table below.

Compare electricity plans and prices

Are there concessions for pensioners and seniors in energy debt?

Many energy retailers will offer concessions to pensioners and seniors on applicable electricity or gas plans, provided the customer meets the retailer’s eligibility criteria. Depending on the electricity and gas provider, pensioners and seniors may have access to energy plans with lower usage and supply rates, or products with larger overall discounts.

Is switching energy companies when in debt worth it?

While you may find a better deal with another energy retailer, it’s important to find out if there are any disconnection or exit fees attached to your current plan, as well as how long it’ll take to change to a new company. If you’re in debt with your current energy retailer, it may be worthwhile picking up the phone and talking through your options. 

If you decide to switch energy providers, consider choosing one that offers monthly payment options or bill smoothing, to avoid larger quarterly bills. Look for an energy retailer that doesn’t charge credit card surcharges and has lower late payment fees.  If you feel you’re not getting the best value from your current electricity or gas provider, use our comparison tool to explore various plans.