The Australian Energy Regulator (AER) has published the Retail Markets Report 2023–24, with the most recent consumer outcome metrics and data revealing how energy retailers can support vulnerable customers.
The report is the AER’s most detailed and comprehensive report into the performance of the retail energy market and energy retailers. It covers a broad range of topics, including energy pricing and affordability, customer service and all aspects of the customer debt cycle.
The report covers jurisdictions that have adopted the National Energy Customer Framework (NECF) and are covered by the National Energy Retail Law and the National Energy Retail Rules – New South Wales, Queensland, South Australia, Tasmania, and the ACT. Although not part of the NECF, Victoria is also included in some sections of the report.
The report covers trends in the retail markets for the financial year of 2023–24 and does not include government rebates that commenced on 1 July 2024.
AER Board member, Jarrod Ball, said the report shows the importance of effective support for vulnerable energy consumers, including retailers looking for opportunities that will provide better support and cheaper energy options for consumers.
“Energy rebates and concessions from federal, state and territory governments have helped support some households with energy affordability, with low-income households spending proportionally less of their annual household income on energy bills in 2023–24 compared to the previous year,” he said.
“The proportion of residential customers with energy debt of more than 90 days has also stabilised at around 2.9 per cent. However, many consumers continue to struggle with energy costs, as indicated by the total number of customers in debt and in hardship programs.”
The proportion of electricity customers participating in energy retailer hardship programs increased from 1.4 per cent to 1.9 per cent, with more customers initiating entry to a hardship program compared to 2023. The average debt for those in hardship programs has decreased by 4.3 per cent for residential electricity customers and 4.9 per cent for residential gas customers, but the average debt on entry to these programs increased by 23.7 per cent for electricity and 33.5 per cent for gas.
“Hardship programs impose obligations on retailers to assist clients experiencing payment difficulty and offer protections and support, including protection from disconnection. The increase in the number of customers in hardship programs shows that many are getting assistance and getting it earlier. However, there is evidence more customers may need assistance with payment difficulties and that hardship programs are not always effective,” Mr Ball said.
The number of residential electricity customers on payment plans but not in hardship programs was also slightly higher, up to 1.9 per cent, while the proportion of gas customers remained stable at one per cent. Around one-third of customers with debt of more than 90 days are neither on payment plans nor in hardship programs and, therefore, may not be getting assistance that they need.
For small business customers, energy debt rose from three per cent to 3.4 per cent, however, the average debt of these customers decreased.
The report showed that there are signs market competition is improving gradually, with more consumers shifting from larger to smaller retailers leading to less market concentration in most jurisdictions. Newer retailers are also providing more innovative new products, such as offers that include a battery or electric vehicle (EV) component. The proportion of customers who changed retailers each quarter during the period ranged from just less than seven per cent of customers in Victoria to around three per cent in the ACT.
Median market offers for residential electricity customers increased in all jurisdictions in 2023–24, however prices fell in most jurisdictions on 1 July 2024.
Billing related issues were a key driver in a sharp increase in calls and complaints to retailers and ombudsman schemes during the period. The AER said it will continue to monitor customer experience metrics.
“Between July and September 2024, we saw median market offer prices fall by up to four per cent so it’s vital that all customers shop around regularly to ensure they are on the best energy plan for their individual circumstances,” Mr Ball said.
The AER continues to progress its Towards Energy Equity strategy and is conducting a review of the payment difficulty protections in the National Energy Customer Framework.
The goal of this review is to ensure that consumers experiencing payment difficulty are proactively identified, engaged early, and supported appropriately with assistance that is tailored to their individual circumstances.
The AER also said it is continuing to advocate for the proposed Game Changer reforms, a package of solutions designed to break the cycle of energy debt, including through more seamless access to concessions and debt relief for customers facing financial hardship, automatically placing customers in hardship programs on better offers and improved access to financial counselling. These were presented to Energy and Climate Change ministers in November 2023.
