Like millions of people in Australia’s eastern states, Bill Grimes has been chilled by a relatively cold winter this year.
Core items:
- Australia’s energy regulator has called for a major change in protection for energy consumers
- She proposes expanding the definition of vulnerabilities and requiring retailers to report earlier to prevent disconnection
- The call comes amid skyrocketing benchmark electricity prices, which have risen by as much as 20 percent this year
Often, he said, the only thing standing between him and misery was electric heating.
“This year… was bloody cold,” said Mr. Grimes.
“Everyone complained about how cold it was.”
The 54-year-old disability pensioner says his story is an ordinary one where he lives in Newcastle, north of Sydney.
He said reliance on his electric heater was sending up his utility bills and eating away at his budget of about $500 a week.
With warnings that electricity prices could rise another 35 percent over the next year, he’s worried about what’s in store.
“I’m doing fine but wondering what my situation will be like 12 months from now or whenever electricity prices spike,” he said.
“When these prices go up like that, it just gets really uncomfortable… when you kind of have to think, ‘What do I have to sacrifice to pay my electric bill?’
“Because the last thing you want is to get the fuck cut off.”
Cries for help often too late
The plight of vulnerable consumers like Mr Grimes is at the forefront of a new report from the Australian Energy Regulator (AER).
In the report, the regulator notes that energy consumer debt is rising, as are the number of customers in distress.
AER Chairwoman Clare Savage said too many customers are being disconnected for not paying their bills.
“By the time these customers are identified as emergency relief by an energy trader, they typically have about $1,700 in debt,” she said.
“A quarter of those customers actually have about $2,500 in debt.
“So I’m pretty sure you can imagine that if you had $5 or $10 a week to spare, it’s almost impossible to come back from $1,500, $1,700 or $2,500 in debt.”
Ms Savage says sweeping reforms are needed to protect energy consumers.
She said vulnerable customers needed to be identified earlier to prevent them falling into a debt cycle and higher thresholds should be put in place before they could be separated.
Ms Savage also says the definition of ‘vulnerable’ needs to be broadened to include groups such as victims of domestic violence, people with mental health problems and people who struggle with literacy.
She said the AER is also considering whether grids and generators – not just retailers – should help cover the cost of helping those in need.
Experiences “consistently bad”
Even so, Ms Savage stopped calling for higher subsidies, saying it was up to state and federal governments.
“One of the challenges we would see is that we designed a system that assumes people’s vulnerabilities are being addressed elsewhere,” she said.
“We assumed that they would have enough income because of the social transfer system.
“What we’ve seen is that it’s actually complex, it’s hard to grapple with.
“People find it difficult to look around for the best deal, they may not understand the material that is being presented to them and as a result we may not get the results we expected.”
St Vincent de Paul’s Policy and Research Manager Gavin Dufty said the AER’s strategy was a good start but reforms needed to go much further.
He said the “piecemeal” approach to energy subsidies and concessions across jurisdictions is failing consumers and needs better coordination.
Mr Dufty also called for a general increase in subsidies and said many consumers were being hit hard by skyrocketing electricity and gas prices.
“We have to make sure they are targeted at the right people and the amounts are reasonable,” he said.
“We can’t keep quiet about that.”
Mr. Dufty also stressed the need for fairness as Australia transitions from fossil fuels to renewable energy sources.
Transition “must be fair”
Mr Dufty said too often poorer households helped foot the bill for the rollout of technologies like rooftop solar panels while missing out on most of the benefits.
“With the energy transition, we need to review how government programs are funded, often through energy bills that end up burdening those who can least afford it,” he said.
“So it’s crucial here to make sure we have a fair and just transition.
“Unfortunately, we’ve passed many of those costs on to people who literally can’t afford them.”
The Australian Energy Council, which represents major gas and electricity retailers, warmly welcomed the AER’s report.
Chief Executive Sarah McNamara said the industry broadly supports the regulator’s proposals but wants to see more details.
She said expanding the definition of vulnerabilities would undoubtedly “win more customers.”
But Ms McNamara said retailers want to get in touch with customers who may be struggling as early as possible.
“The real challenge for retailers isn’t so much defining vulnerable customers,” she said.
“It’s about understanding the best ways to encourage these customers to engage with their retailer.”
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