More people are in more debt to their energy suppliers than was the case a year ago, the Australian Energy Regulator (AER) has revealed in its annual retail markets report.
The proportion of electricity customers participating in hardship programs increased from 1.4 to 1.9 percent, and the average debt on entry to these programs increased by 23.7 percent for electricity and 33.5 percent for gas.
The proportion of residential customers with energy debt of more than 90 days has stabilised at around 2.9 percent, but the number of residential electricity customers on payment plans (but not in hardship programs) was also slightly higher at 1.9 percent. For gas customers, the figure remained stable at one percent.
While median prices for residential electricity customers increased in all states and territories in 2023/24, they fell in most places on July 1.
The Regulator is concerned that around one-third of customers with debt of more than 90 days are neither on payment plans nor in hardship programs and so may not be getting the assistance that they need.
AER Board member Jarrod Ball urged anyone struggling with their energy bill to contact their retailer as soon as possible.
“Under the national energy laws, they must assist you,” he said.
“Hardship programs impose obligations on retailers to assist clients experiencing payment difficulty and offer protections and support, including protection from disconnection,” Ball explained.
Low-Income Households Now Spending Less on Energy
He said the report shows the importance of effective support for vulnerable energy 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 pointed out.
The AER says there are signs that market competition is gradually improving, with more consumers shifting from larger to smaller retailers, meaning less market concentration in many areas.
The proportion of customers who changed retailers each quarter during the period ranged from just under seven percent of customers in Victoria to around three percent in the ACT.
“Between July and September 2024, we saw median market offer prices fall by up to four percent, so it’s vital that all customers shop around regularly to ensure they are on the best energy plan for their individual circumstances,” Ball said.
“[Customers should] ask their retailer to be put on their best available plan. The retailer must regularly include on the front page of their bill whether they can offer a better plan, and how to switch.”
Further Reforms Running Behind Schedule
The Regulator also worked with stakeholders from the energy sector to design Game Changer, a package of solutions that was presented to Energy Ministers at the Energy and Climate Change Ministerial Council (ECMC) meeting in November 2023.- improve concession and rebate systems to ensure more consumers receive the concessions and rebates to which they are entitled
- require retailers to automatically place consumers in hardship programs on a better offer if one is available
- improve access to financial counselling support
- provide retailers demonstrating best-practice support for customers with access to co-funding, which would be used to deliver increased debt relief and improved access to energy efficiency improvements for consumers in financial hardship.
“In early 2022 we identified $645 million in quantifiable financial costs driven by vulnerability each year. However, there are also the intrinsically non-quantifiable costs, like impacts on population health and wellbeing.”
