The Australian Energy Regulator (AER) has published its Statement of Expectations 3, which extends protections for customers in financial stress due to COVID-19, until the end of March 2021
This comes as AER data shows rising energy debt in households and small businesses over the last six months, but with fewer customers accessing formal payment plans and hardship programs.
AER Chair, Clare Savage, emphasised the need for retailers to ensure that customers currently on deferred debt arrangements are transferred to sustainable payment plans or even hardship programs where appropriate.
“We want to see retailers taking proactive action to assist their customers so it’s critical that customers don’t ignore the calls, emails, texts and letters from their retailers,” Ms Savage said.
“If you are worried about paying your bill, talk to your retailer about your energy debt even if you can’t afford to pay anything right now. They will work with you and you will not be disconnected.
“It is essential that if customers can pay something towards their bills, they do, even if it’s just a few dollars a week right now.
“This will help chip away at their debts and ensure energy businesses can continue to provide maximum support to those customers who are struggling.”
Since March 2020, the AER’s Statement of Expectations has been working to protect consumers with 37,000 fewer disconnections and 154,000 fewer referrals for debt collection compared to the same period (April until end of September) last year.
At the same time, complaints to ombudsman schemes have significantly reduced across most jurisdictions.
New data supports the AER’s sharper focus in its Statement of Expectations 3 on sustainable payment plans and getting customers into hardship programs. From the end of March 2020 to 19 October 2020:
- Household electricity 90 day debt grew by $15 million, a 14 per cent jump, with the average amount of debt owed up 17 per cent to more than $1,100
- Total debt for households on hardship programs grew by more than $9 million to almost $114 million, with average amount of debt growing by 17 per cent to $1,390
- Total amount of 90 day debt for small businesses rose 45 per cent, an increase of $13 million to almost $42 million, and small businesses on average owed $2,690, up 40 per cent
- Despite increases in 90 day debt, there was a 15 per cent drop in customers on payment plans and a seven per cent drop in hardship arrangements
The AER’s Statement of Expectations 3 expects retailers to offer payment plans or hardship arrangements to struggling customers, which could include a period in which no payment is made.
Retailers are also expected to consider actions like lower cost plans to minimise their customers’ ongoing energy costs along with the volume of any outstanding debt. Retailers are also expected to:
- Not disconnect residential customers in financial stress who are in contact with the retailer about their debt, and small business customers who are adhering to a payment plan
- Process an order for reconnection immediately on contact from a disconnected customer and waive disconnection, reconnection and contract break fees
- Defer referrals to debt collection agencies of residential customers in financial stress and who are in contact with their retailer about their debt. Small businesses that are adhering to a payment plan should also not be referred to debt collection agencies for recovery actions or credit default listing
Minister for Energy and Emissions Reduction, Angus Taylor, said that it is vital that households and businesses receive support to deal with the economic repercussions of COVID-19.
“The Government recognises the ongoing impact of COVID-19 on Australian households and businesses and keeping the lights on isn’t something we want people to be worried about,” Mr Taylor said.
“For anyone who is experiencing hardship or facing difficulties in paying their bills, I urge them to contact their retailer to discuss the support that is available.
“However it is important that customers who can pay their bills continue to do so, in order for support to be provided where it is most needed. Retailers and consumers must work together.”
Australians can find tips for reducing their energy costs and getting the rebates and help they are eligible for on energy.gov.au.
Households and small businesses can also use the Government’s free energy price comparison website Energy Made Easy to shop around for the best deal for their current situation.