Although wholesale energy prices have fallen over the past year, an Australian Energy Regulator report released last Monday reveals the amount of energy debt jumped by 21 per cent between the end of March and start of November. There were nearly 171,500 people in debt, owing an average of $908 each, and another 73,100 customers on hardship programs with an average $1371 debt.
Nearly three in five people had their payment plans cancelled, although this proportion was lower than the previous three years, which the AER said indicated retailers were less inclined to cancel payment plans during the pandemic.
For those on hardship programs, just one in three “successfully” exited, either returning to normal billing or to a new payment plan. Nearly 60 per cent were “excluded” — in most cases meaning the retailer will send debt collectors after them — with three-quarters pushed off the hardship programs for missing payments.
Ms Young said retailers had been more flexible during the pandemic. The system worked for some people who had run into short-term financial struggles but were able to get back onto their feet.
But others were never going to be able to pay their bills if their income was too low, they struggled to reduce energy use further because they couldn’t afford more efficient appliances or were in older housing or rentals, and were spending more time at home during the pandemic lockdowns.
In a report she released on Wednesday, the ombudsman argues that for those having longer-term financial problems, having their power disconnected should prompt retailers to engage with them not ban them from any future assistance. She also wants to see new industry standards for estimating usage when setting up payment plans and when those plans can be cancelled, and an end to fast-tracked debt collection.
Ms Young also urges people struggling to pay to contact their power retailer.
“Reaching out to your retailer will prevent disconnection, it will get you onto an affordable payment plan, it will head you in the direction of success,” she said. “Even if you’ve got some debt there, reach out to your retailer and set something up to make 20201 easier for you.”