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Residential disconnections for gas and electricity on the rise again

July 22, 2021 Lifestyle News No Comments

Need to know:

– Residential energy disconnections are on the rise again, after almost none last year

– Advocates say customers are having difficulty accessing mandated support from their energy retailer

– There are calls for retailers to be more proactive about helping their customers

When the COVID-19 pandemic hit Australia, the Australian Energy Regulator (AER) chair Clare Savage had a very simple message for energy retail providers: disconnections of customers had to stop.

“We said, look, no more. Right now this is not the time,” Savage tells CHOICE.

“We went beyond our remit. We were asking a lot of the sector because the law and the rules don’t provide these protections. We just came out as the regulator and said ‘this is what we expect’. There was no legal backing to it.”

The message got through and the regulator’s statement of expectations worked. Disconnections of electricity and gas ceased almost entirely.

In the 12 months prior to COVID, 75,000 customers had been disconnected from their electricity or gas (not including Victoria, which is counted separately). So it’s safe to say that many thousands of people were saved from having their essential services cut off after the difficult first lockdown from March 2020.

In the early months of 2021, however, energy disconnections are on the rise again, as customers who are struggling to pay the bills are finding their power cut off once more.

Retailers should only disconnect as a last resort

Between March and June 2021 there were around 5700 disconnections tracked by the AER, the vast majority of which were residential.

That’s in part due to the AER changing their statement of expectations from ‘no customer should be disconnected’ to ‘no customer in contact with their retailer’ should be disconnected. The move allowed retailers to disconnect customers who don’t pay their bills and consistently decline to engage with them about payment plans or other hardship arrangements.

In Victoria, where the Essential Services Commission regulates the market, monthly disconnection figures peaked at over 2000 electricity disconnections in March this year. They’ve come down slightly since.

Despite the changes to the AER statement of expectations (which lapsed at the end of June) retailers are still only meant to be disconnecting customers as a ‘last resort’, something advocates say is not always the case.

Customer call goes unanswered

Sarah (not her real name) lives on the Central Coast in New South Wales and was working at the local Coles up until October last year when she had to quit for mental health reasons.

She is now more than $1200 behind on her energy bills. Sarah says when she reached out to her provider EnergyAustralia to discuss hardship arrangements, she never got a call back.

“My mental health is not great and I don’t know what to do at the moment,” she tells CHOICE.

The mother of three children says she has now been issued with a disconnection notice for later in the month.

“I don’t think anyone really gets it until they live it,” she says through tears.

EnergyAustralia responds

EnergyAustralia, which supplies electricity and gas services to NSW, Victoria, Queensland and South Australia residents, was accused last year of not following the rules when it comes to disconnecting customers.

In November, after action by the AER, the company was ordered to pay $1.5 million in penalties after the Federal Court found it had breached energy laws and wrongfully disconnected eight customers in financial hardship.

Mark Brownfield, EnergyAustralia’s residential executive, tells CHOICE that “disconnecting a customer is always the last resort. Our policy is that no-one who puts their hand up for help is disconnected.”

“As of 24 June 2021, so far this year we have disconnected 1272 sites for non-payment. Seventy of these are business customers,” he says. “Generally, the customers we are disconnecting are those who, despite repeated attempts over some time, have not engaged with us. None of these disconnected customers were enrolled in either our residential or business hardship programs.” .

Brownfield adds that EnergyAustralia was fully compliant with the AER’s statement of expectations, and that at the peak of the pandemic 24,000 customers were engaged with their EnergyAssist program for financial hardship.

Retailers not acting in good faith, says charity

UnitingVic.Tas is a  charity that runs a program for people facing energy hardship, advocating on their behalf with energy retailers. Its senior manager of energy and financial literacy, Matt Cairns, says he doesn’t believe energy retailers are acting in good faith, or using disconnection only as a last resort.

“Disconnection clients come through with a letter [threatening disconnection] and then we will get in touch with the retailer and negotiate,” he says.

Often customers aren’t put on repayment plans that are affordable or suitable, he says, which only drives them towards disengaging with their provider.

Retailers should be ‘more proactive’ about helping

Rhiannon Cook from St Vincent de Paul Society NSW agrees that more can be done by retailers.

“One thing that should change is that retailers should be more proactive in reaching out to people when they see someone is late paying a bill and has started to accrue debt,” she says.

“They shouldn’t wait for that person to contact the retailer. The retailer can contact that person and say ‘this is how we can help’.”

AER’s Clair Savage says it’s worrying that household energy debt levels have continued to rise, without a corresponding increase in customers accessing retailers’ financial hardship policies.

“We need to be making sure the retailer is proactively identifying when customers might be in financial difficulty and that they’re making sure that any payment plans that they offer to those customers takes into account how much they can afford,” she says.

Process should be easier

Victorian Water and Energy Ombudsman Cynthia Gebert says the recent rise in disconnections is concerning, and some retailers were not following the spirit of the AER’s guidance even when it was in place.

Victoria’s regulator, the Essential Services Commission, also put out its own guidance to retailers, which largely mirrored the national guidance.

“There are some retailers that are not demonstrating the levels of support and compassion that we would have hoped,” Gebert tells CHOICE.

She says she has seen some cases like Sarah’s where the customer had attempted to reach out and make arrangements with the retailer but were unable to.

“It’s easy to say you must engage with your retailer, but if it’s a hard process they are not going to come back and engage in the future,” Gebert says. If the barrier to access rights becomes too high, she explains, the rights become irrelevant, as people are unable to exercise them.

It’s time for energy retailers step up, not step back

Patrick Sloyan from the Consumer Action Law Centre says that with the economic impacts of COVID still being felt by many around the country, and with federal government support being withdrawn, now was not the time for disconnections to ramp back up again.

“COVID is still impacting the community, it’s not going away. The regulators should be stepping up, not stepping away from these guidelines,” he says.

The AER has extended some protections in NSW in July to cover the most recent lockdown. But Sloyan says it’s not enough.

“The pause last year in disconnections showed the sky didn’t fall in,” he says.

“Those who were struggling were saved, and we really want to see retailers step up – and we’re not seeing them do that. We are seeing them quickly return to past poor practices with disconnection.”

Readers seeking support can contact Lifeline crisis support on 13 11 14.

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