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Release of the Energy Hardship Inquiry Draft Report
01 September 2015
The Essential Services Commission has proposed an overhaul of the regulatory framework that sets out how energy retailers need to assist customers struggling to pay their energy bills.
The Commission’s draft report – Supporting Customers – Avoiding Labels – released today says that, under the current framework, by the time many customers receive assistance, it is too late.
Dr Ron Ben-David, Chair of the Commission said debt was the immediate consequence for a customer of not paying their energy bills on-time.
“Our inquiry found that the average debt of customers with some retailers can be as high as $1,800 before they are offered assistance,” Dr Ben-David said.
The Inquiry also found that early action to address energy debt is the key to ensuring that customer’s payment difficulties do not escalate.
“While energy debt is initially a consequence of a customer’s financial difficulty, once accrued, it becomes a cause of that difficulty,” he said.
Customers increasingly rely on technology for every day communication and interaction. As a result, disconnection from electricity supply risks social and economic isolation.
“Too often, and increasingly so, retailers’ hardship programs are a stepping stone to disconnection rather than an avenue away from it,” Dr Ben-David said.
The Commission is proposing a new approach to assisting customers experiencing financial difficulty based on the principle of shared responsibility.
“Avoiding debt and disconnection can succeed only if all parties accept their share of responsibility,” Dr Ben- David said.
The proposed framework provides unambiguous guidance for retailers and customers on how they should work together to address payment difficulty.
The new framework will provide customers with a new early action option which they can use to self-manage their payment difficulty. It also provides a new safety net for customers with the most sever payment difficulties. The aim of the safety net is to help customers make their energy use affordable.
“The proposed framework focuses attention where it is required – namely on the customer. We are confident that our proposed arrangements will lead to better and more consistent outcomes for customers,” Dr Ben- David said.
The Commission will be consulting extensively following the release of the draft report, including:
Discussions with retailers and consumer groups;
Six public information sessions in Melbourne and regional Victoria; and
Establishing technical working groups
The Commission is inviting written submissions in response to the draft report by 2 October 2015.