After a year of consultation, Victoria’s Essential Services Commission’s (ESC) final report on its hardship inquiry was tabled in State Parliament on Tuesday. It looked at how energy retailers support consumers who experience difficulties paying their bills.
The report, “Supporting customers, avoiding labels”, proposes a new framework for hardship in Victoria and focuses on the scope of assistance offered by retailers, delivery of customer assistance, monitoring and reporting.
The ESC work has highlighted the complexity and challenge of identifying and then providing timely assistance to consumers who genuinely need support to manage their energy bills. Ultimately, hardship and affordability issues are a shared responsibility between industry, the government (which provides concessions) and consumer and welfare groups, who can help with better targeting of support.
The ESC is now looking at designing and revising regulatory instruments, such as new interim payment plan performance indicators, a consumer energy code on payment difficulties, new industry guidelines, revising disconnection operating procedures and Guaranteed Service Levels.
The framework is set to be implemented on 1 July 2017. From now until then, there is still a comprehensive amount of consultation to be undertaken with the Commission, government, industry and consumer groups to go through the practical implementation to transition to the proposed framework.
The stated purpose of the new framework is to assist customers experiencing difficulty to avoid long-term debt, repay debt that accrues, while, wherever possible, maintaining access to power.
In making the case for a new framework, the ESC has argued that the previous hardship programs have been “too often, and increasingly so, hardship programs simply provide a stepping stone towards disconnection rather than an avenue away from it”.
It points to the most recent available data for 2013-14 which showed 58,503 customers were disconnected for non-payment of energy bills[i].
Disconnection remains an option of last resort for energy companies and when considering the disconnections for customers on instalment plans and those experiencing multiple disconnections within two years (which are used as indicators of those in financial difficulty) these have trended down[ii].
The ESC acknowledged this in its report, but also commented that the fall in the number of customers who had multiple disconnections over two years that they are able to arrange an instalment plan to avoid future disconnection.
To meet the Government’s policy expectation of “wherever possible, energy consumers remain connected to supply, and that disconnection of customers is only used as a measure of last resort”, the ESC framework involves:
The scope of assistance is outlined in the report and shown here:
The ESC points to the addition of two new protections for consumers under its framework, specifically automatically putting consumers onto a payment plan and the use of prepayment plans in the final stage as “an ultimate safety net”.
The ESC believes a retailer should be able to consider disconnecting a consumer if:
The final report has set out an implementation roadmap for the framework which is shown below:
With colder weather comes an increase in electricity and gas use. The AEC has published analysis of average electricity and gas costs by region using the latest energy consumption data. It shows seasonal breakdowns of energy use for each major network, as well as state by state average gas and electricity costs. It also offers simple tips on how people can save on their bills.
During the height of COVID-19, Australian retailers were concerned that the impacts of government interventions might unintentionally impact the ability of retailers to meet their upstream obligations. The impacts on retailers of providing additional protections – on top of the already notable consumer protections in place - and the longer-term debt implications for customers remained a concern.
A perennial discussion in energy market policy is the contest between what we are ultimately trying to achieve: “customer benefits” or “market benefits”. When making market rules, or building monopoly assets, rules require that we assess “net market” benefits. A number of recent government policies have been justified on customer benefit assessments alone.
Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.