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Energy hardship review must put customers first

Stronger protections and better support for energy customers facing hardship must be at the centre of any response to Victoria’s spiralling rate of electricity and gas disconnections, says the Victorian Council of Social Service.

“The Essential Services Commission has diagnosed significant problems in our retail energy sector with the release of its Energy Hardship Review draft report,” said Emma King, CEO of VCOSS.

“VCOSS welcomes the general direction of recommendations put forward in the draft report, with the focus on creating better and more consistent outcomes for customers. Energy disconnections have spiralled in recent years and it is timely for the State Government and the ESC to intervene to improve customer protections, and help ensure people remain connected to these essential services.”

“The ESC report finds that customers on payment plans and in hardship programs use, on average, double the amount of electricity as other customers in the same postcode. They also find that the earlier a customer is identified as experiencing payment difficulty the more likely they are to be able to manage their repayments. This would help avoid the accumulation of large debts that become impossible to pay, which ultimately leads to disconnection under our current system.”

“The ESC has made a number of recommendations aimed at improving identification of customers in hardship and intervening early to help them manage debt and avoid disconnection.”

“The report proposes changes to the way retailers work with customers to manage energy hardship and debt. This includes replacing customer hardship plans with a new graduated five-step process that includes the ability for customers to reschedule bill payments and defer debt repayments to future bills, before being put onto an extra assistance plan. We strongly advocate that if the capacity for disconnections is to remain in the new system, it should be only as a measure of absolute last resort and that the ESC will need to monitor retailers closely to ensure they comply with regulations.”

“The proposed system should be viewed a minimum obligation rather than ‘best-practice’ process. VCOSS will participate in discussions to strengthen the proposal, and advises that care must be taken in its design and implementation so retailers provide sufficient help, and to ensure customers have the flexibility to get extra assistance when they need, without being exposed to the risk of disconnection.”

“The ESC also proposes to allow the use of pre-payment metering and supply capacity restriction as a way of managing the energy use of some customers in severe hardship who have been reconnected after disconnection. VCOSS acknowledges that the proposal is for very targeted and limited usage of pre-payment metering and supply restriction, and includes the involvement of an independent third party in negotiations between the customer and the retailer. Nevertheless VCOSS does not support the use of pre-payment metering or supply restriction. We are concerned that such technologies may be used before other more helpful and effective measures, such as energy efficiency improvements, appliance upgrades and information and training on more effective use of household appliances, have been exhausted.”

“Disconnection must be a measure of absolute last resort in our retail energy system and the onus must be placed on retailers to work with their customers to reduce the risk of being cut off.”

“If the proposed system is going to serve the people of Victoria well, the ESC will need sufficient regulatory powers to monitor and audit retailers and enforce the new framework.”

“Ultimately the success of the framework will be whether people get the human benefits of energy without it being unaffordable or driving them into debt or disconnection. VCOSS looks forward to working with the ESC, retailers and the State Government to implement a new retail energy framework that has the interests of people at its heart.”