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The Victorian Essential Services Commission (ESC) released its latest Energy Market Report (EMR) in March 2024. This report took an in-depth look at energy usage, particularly for households experiencing payment difficulty. 

The Energy Market Report (EMR) looks at the price of electricity in Victoria and the actions consumers can take to save on their electricity bills. The Victorian energy rules require retailers to offer support to households in payment difficulty, which can include advice on whether a lower price is available and on how to lower energy consumption. It is important retailers meet these obligations to support households experiencing payment difficulty.

Many Australian households are experiencing cost of living stress, including pressure from rising energy and gas prices. In Victoria, the price of electricity rose 23 per cent between June and August 2023 alone, while approximately 70,000 energy customers received payment difficulty support in Victoria in 2023.

There are existing rules and assistance frameworks designed to support all households, and especially those struggling with paying their electricity bills. All electricity retailers and gentailers are obliged to regularly inform their customers about whether they could access a better price for their energy. A retailer must determine whether a customer is on the best offer by looking at that customer’s usage and comparing what they pay on their current offer against the cheapest generally available offer. 

The Energy Retail Code of Practice also requires retailers to offer support to households who are experiencing payment difficulty. This can include advice on whether a lower price is available and ways to lower energy consumption. Government programs can also help households lower their reliance on grid-supplied electricity.

Pricing vs usage

The March 2024 EMR examined data from 2022 and 2023 to gather insights into consumer energy pricing and usage, focussing on customers experiencing hardship.

The report found that despite a rise in general electricity prices, Victorian customers receiving payment difficulty support paid a lower median price per kilowatt hour for their electricity than customers who did not receive payment support. In 2022, households receiving payment difficulty support paid a median price of approximately 27 cents per kilowatt hour, while households that did not receive payment difficulty assistance from their retailer paid an average price of 30 cents per kilowatt hour.

Despite this, the average total energy cost per household was higher for those customers who received payment difficulty support – with households receiving payment support paying around $1,460 total per year for electricity in 2022 and households not receiving payment support paying around $1,218 total for the same period.

These differences indicate that for hardship customers, energy usage is a definitive factor in high energy bills. On average, households receiving payment difficultly support used around 5,150kWh of electricity per annum, while the average usage for households not receiving payment support was around 3,800kWh. 

There are many factors that contribute to high energy usage. One factor is housing arrangements, such as renting or living in an apartment. Living in an apartment can make it difficult to install personal solar or batteries. Renters are also likely to have difficulty installing energy-saving measures, such as solar or batteries, as they are likely to require approval from their real estate and/or landlord. They are also less likely to want to pay for these solutions out of pocket as they are not likely to be permanent living arrangements. 

Poor quality housing can also have a big impact on energy consumption. Around one in five households on a very low income are unable to keep comfortably warm in winter due to housing quality issues, such as poor heating and cracks in walls and floors. Renters are also more likely to have difficulty negotiating with landlords or real estates to repair or install up-to-date appliances that are more energy efficient to manage these issues.

The report also found notable increases in gas customers accessing tailored assistance. In December 2023 there were 66,571 gas customers receiving tailored assistance, an increase of 23 per cent compared to December 2022. For the same period, there was an 11 per cent increase in electricity customers receiving assistance.

Compliance and penalties

The Victorian ESC undertakes compliance and enforcement activities – including fines, penalty notices and litigation – designed to protect consumers, especially those experiencing hardship. These activities are undertaken to deter future non-compliance, to ensure non-compliant businesses do not benefit from their conduct, and to enhance trust in the energy market.

In 2023, the commission issued a penalty notice to AGL for an alleged contravention of best offer rules and planned supply interruptions. In October 2023, AGL paid $799,656 in penalties for allegedly failing to provide Victorian energy customers with accurate information about their best offer.

The ESC alleged that 22 customers did not receive accurate best offer information that they were entitled to from AGL as a result of the alleged calculation errors by AGL. AGL reported the issue following enquiries from the commission, as part of the commission’s proactive program to monitor energy retailer compliance with customer best offer rules.

In October 2023, CitiPower was fined $406,824 in penalties for allegedly failing to notify 43 customers of two separate planned electricity supply interruptions in Brunswick and Carlton. One of the customers was a registered user of life support equipment.

In December 2023, the commission commenced proceedings in the Supreme Court of Victoria against both Sumo and Origin. It was the first time the commission commenced court proceedings seeking civil penalties, orders the entity contravened the provisions and other remedies, including adverse publicity orders. 

It alleged that between 31 December 2021 and 12 August 2022, Sumo engaged in unlawful door-to-door marketing of energy contracts to at least 5,941 Victorians. The Electricity Industry Act 2000 and the Gas Industry Act 2001 prohibit electricity and gas retail licensees (or their agents) from calling on a domestic customer at their home to negotiate an electricity or gas contract. It is also alleged that Sumo signed up several customers to Sumo’s energy plans without obtaining their explicit informed consent.

The commission alleged Origin failed to meet its obligations under the life support and payment difficulty frameworks, which are designed to protect customers experiencing vulnerability. Origin’s alleged breaches affected more than 30,000 customers between 2019 and 2023 and included the failure to continue the provision of payment assistance. The alleged life support breaches affected 11 customers who were put at increased risk from power interruptions.

It also alleged that Origin failed to report breaches to the commission within the required timeframes.

Wrongful disconnections

The commission notes that wrongful disconnections are a compliance and enforcement priority. The Electricity Distribution Code of Practice stipulates that an energy retailer should only disconnect electricity or gas supply as a last resort, and only after it has followed rules relating to disconnection. 

Wrongful disconnections are disconnections that are found to have violated the code. Wrongful disconnections can be very distressing for customers and have a significant impact on customers’ physical and mental wellbeing. This is particularly important in the case of meter abolishment, as these types of disconnections involve the physical removal of the meter. This means that reconnection of supply can take an extended period of time if the disconnection is not raised correctly, or is not at the request of an authorised person. 

The March 2024 EMR found a significant increase in the number of wrongful disconnections between July to September 2023 and October to December 2023. 25 wrongful disconnections were self-reported by retailers in the period of July to September 2023, whilst 125 were reported for the October to December 2023 period. 

The ESC said it was concerned by the large increase in the number of customers impacted by wrongful disconnections between July and December 2023, and said that energy retailers must have comprehensive controls in place to ensure customers are only ever disconnected in line with the rules. The commission conducted compliance reviews on aspects of three key retailers’ disconnection processes in 2023 and published the findings on the commission’s website.

Service level payments

The guaranteed service level (GSL) that energy customers can expect is set out in the Electricity Distribution Code of Practice. The purpose of the GSL is to define the minimum service levels that distributors are required to provide to customers, and the payments that distributors are required to make to customers if they fail to meet those minimum service levels.

Victorian electricity distributors must report their compliance and performance to the ESC in accordance with the GSL scheme. GSL payments are designed to acknowledge the inconvenience customers experience when their distributor does not meet basic service levels. Events that fall under the GSL include unplanned outages, late or missed appointments, and delays to new connections.

In the March 2024 EMR, the ESC published GSL scheme performance results from energy distributors for the first time. The performance results detailed GSL payment categories and how much each energy distributor paid in total to customers in 2021–22 and 2022–23. 

Distributors paid approximately $22 million in total to Victorian customers for failing to meet the GSL requirements in the 2021–22 financial year. In the 2022–23 financial year, that figure dropped to approximately $11.5 million. This comparison shows that customers received a more reliable energy supply in 2022–23 compared to 2021–22. The ESC credited this reduction primarily to a substantial decrease in major event day payments.

Major event day payments were introduced into the GSL scheme in 2021. Major event day payments are payments that are made following extreme weather events, such as fires or storms, that have broad impacts on the electricity network. This is because GSL payments may not be payable if unplanned outages are found to be caused by events outside a distributor’s control. The next version of the EMR report will include data from 2023–24, including several periods when Victoria experienced extreme weather that had a significant impact on electricity supply. The ESC said this data will be published in March 2025. 

New consumer resources

The ESC has released its Victorian Energy Market Dashboard, a tool that consumers can use to find out key facts about the energy industry. The dashboard displays information on Victorian energy retailers’ performance in terms of their service to customers, as well as relative to other energy providers. Customers can view information such as a retailers’ customer service standards and assistance for customers in payment difficulty. The dashboard uses quarterly data from reports submitted by retailers.

The commission has also developed and published the Land Access Code of Practice, which came into effect on 1 March 2024. The code is designed to regulate the rules and processes that transmission companies must follow when accessing or seeking to access private land. The code introduces obligations on transmission companies, with the purpose of minimising the impacts of land access and improving consultation with affected parties, including landowners and occupiers.

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