AEMC: Energy retailers to tone down late bill payment penalties, protecting vulnerable customers

By Ceyda Erem ·

From July 1, energy retailers will no longer be permitted to charge excessively high penalties for late bill payments, thanks to new rules introduced by the Australian Energy Market Commission (AEMC) yesterday. 

In the past, retailers were able to provide customers with ‘conditional discounts’, such as pay-on-time discounts, and then charge a penalty when a customer failed to make a payment by its due date.  

The AEMC explained, that this often lead to excessive prices and created financial hardship for those who can least afford to pay. 

And according to research conducted by the Australian Competition and Consumer Commission (ACCC), more than one in four electricity customers failed to achieve their pay-on-time discount.  

Federal Energy Minister, Angus Taylor told ABC News Breakfast that customers were even getting stung for paying only a few hours late. 

"Depending on how much energy a household uses, this could cost them as much as several hundred dollars a year. For a typical family, this might be $185 a year they're being hit up,” he said. 

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The new rules will now cap the level of conditional discounts and fees to what the AEMC has described as a ‘reasonable cost’, while still allowing customers to keep their existing contracts and current discounts they signed up for. 

“We think this rule balances protecting consumers from excessive fees with retailers’ need to recover reasonable costs when people don’t pay on time,” said Commission Acting Chief Executive, Suzanne Falvi.

“Large conditional discounts that we have seen in the past are a big hit for a small consumer under financial pressure. Penalties vary and have reached as much as 40% in the past. So, depending on how much energy a household uses, this could cost them as much as several hundred dollars a year.”

Interestingly, many retailers weren’t onboard for the new rule change, stating that the number of market offers with conditional discounts had already declined. 

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However Mozo energy expert, Nathan Warne, said the upcoming rule changes could provide many vulnerable Aussies with the breathing room they need. 

“It’s not uncommon to see households who fail to pay their bill by the due date are experiencing financial hardship with other recurring bills,” he said. 

“By keeping charges like these at a fairer level, it’ll give households who are struggling the space they need to get back on their feet.” 

But you don’t have to wait around for July 1 to see a difference in your energy bill. In fact, Aussies can take back the power now by switching to a better value energy plan

So if you’re ready to find out how much you could be saving, enter your postcode below to start comparing plans in your area!

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Ceyda Erem
Ceyda Erem
Money writer

Ceyda Erem is Mozo’s authority on Energy, as well as having broader expertise as a personal finance writer. She loves to put her researching and writing talents into stories that help our readers to make more informed financial choices, whether that’s about finding the best energy deal or writing about the latest sneaky bank tricks. Ceyda has a Bachelor of Arts (major in writing) from Macquarie University.