Electricity and gas bills racking up for consumers after COVID recession hit
Now JobKeeper’s done, Melbourne café owner Hamed Allahyari is worried.
Some days are better than others but, overall, his takings are down by about half compared to life before COVID-19.
“If I don’t have JobKeeper, how do I pay my rent, how do I pay my expenses?”
One of his biggest expenses is gas and electricity, and the bills are piling up.
He is one of about 150,000 people in debt to their gas and electricity provider.
Since March last year, small business debt to energy retailers has increased by 22 per cent and residential debts by 32 per cent.
The total debt owed is around $200 million.
The Australian Energy Council, which represents 12 energy retailers, expects those numbers to get worse.
Its CEO, Sarah McNamara, said retail energy businesses have shouldered their fair share of the economic burden through COVID-19.
“We are anticipating we will see more higher bad debts, more customers in hardship programs,” Ms McNamara said.
Number of disconnections increasing
A directive from regulators to halt electricity and gas disconnections in April last year resulted in zero disconnections without a customer’s consent until August, according to the Australian Energy Regulator.
In November, regulators weakened the protections and issued a ‘Statement of Expectations’, which allows energy businesses to disconnect customers whom they could not contact and small businesses that had not arranged a payment plan.
From August to March this year, 10,000 customers across New South Wales, Queensland, South Australia, Tasmania and the territories were cut off from power.
In Victoria, which regulates its own market, there were 2,300 in March alone. Western Australia’s regulator does not have updated figures on disconnections.
Regulators urge caution
Remaining consumer protections, which have slowed the pace of gas and electricity disconnections, end in June.
Gerard Brody from the Consumer Action Law Centre is worried.
“When someone is disconnected, that means they lose the food in their freezer, that means they go without sometimes hot water and cooking, that means they have trouble getting their kids to school,” he explained.
Mr Brody said the data shows some energy businesses have already not been listening to the regulators and called for more compliance and enforcement action.
“Regulators have been very clear with its expectations, but that is a different thing from having rights under the law,” he argued.
Kate Symons from the Victorian regulator, the Essential Services Commission (ESC), said she is keeping a close eye on businesses in that state.
“You are entitled to a range of assistance and energy retailers must work with you to manage your energy debt,” she said.
In February, Australian Energy Council member Alinta Energy was forced to pay $1.25 million in fines after the ESC found the company caused distress to vulnerable customers before the pandemic in October 2019-March 2020.
The regulator found Alinta was putting hurdles in front of customers asking for assistance, including making them provide financial information before agreeing to set up payment plans, with several customers reporting experiencing suicidal thoughts as a result.
“If we see those energy rules not being followed, we won’t hesitate to hold those companies to account,” Ms Symons said.
Energy retailers call for end of additional protections
Australian Energy Council CEO Sarah McNamara said energy retailers have been working with customers during COVID-19.
“Our desire, though, is to see that statement of expectations stop being required from June 30 as we move past the COVID pandemic and into the next phase of recovery,” she said.
Ms McNamara also has a suggestion for easing the debt burden carried by energy retailers.
“What they (retailers) would like to see is that the actual costs of managing these kinds of risks are reflected in the regulated price caps that are calculated by the default market offer and the Victorian market offer,” she said.
What does Hamed think about potentially paying more for his electricity?
He shook his head and offered a bewildered smile.
“I don’t know, to be honest.”
He is already on a payment plan with his energy provider to pay down the debt he currently owes.