Essential services proposes new approach to help Victorian electricity customers facing hardship

After a record number of energy disconnections in Victoria in 2013-14, the Essential Services Commission has proposed a new framework for customers who face difficulty making their electricity bills.

According to the new framework proposed by the ESC, electricity customers who have had their services disconnected could be made to prepay or have electricity rationed to be reconnected, reported The Age.

Apart from this, customers will also have immediate online access to defined payment options if they let their electricity provider know in advance that they may not be able to make the due payment.

These measures are being drafted with the aim that fewer consumers end up with serious bill trouble and consequently, fewer disconnections.

"We're trying to make sure that the assistance offered to customers is tailored to their circumstances," said ESC chair Dr Ron Ben-David.

"We've found cases where the debt is in the thousands of dollars, by which time the customer has no hope."

The Energy Hardship Inquiry launched by the ESC in February also found that early action to address energy debt is the key to ensuring that the customer’s payment difficulties do not escalate.

In 2013-14, over 34,000 homes had their electricity services disconnected, and 24,000 homes were disconnected from gas. These record figures represented increases of 36 and 42 per cent, respectively, in the previous year.

Denise Boyd, Director of Policy and Campaigns at the Consumer Action Law Centre, said the current system was failing Victoria's most vulnerable people and it was good the ESC recognised the need for change.

"We're heartened the Essential Services Commission has recognised the issues associated with energy debt and disconnection, and we'll be working closely with retailers, the commission and government to make change happen," Ms Boyd said.

The proposed framework provides clear guidance for retailers as well as customers on how they should work together to address payment difficulty. Some of the suggested steps include:

  • On the customer’s part, they can warn their electricity provider that they will not be able to meet a payment. If they do this before the bill falls due, they can avoid a black mark on their credit history while also maintaining certain benefits for paying bills on time.

  • These customers will then enter a program to repay overdue bills over the two subsequent billing periods

  • Those consumers who simply miss a bill without any warning to the retailer will be offered the same repayment schedule. However, they will have to deal with a negative mark on their credit history and may lose certain benefits.

  • If the customer is unable to repay the bill over two billing periods, the repayment period will then be extended to five periods.

  • If this is still not enough, the retailer must offer an "active assistance plan", which may include advice about how to use less energy and guidance about government or community programs that may be available to help.

  • It is after all these steps have been tried and exhausted can a customer be disconnected. To be reconnected, they will have to be part of a reconnection plan. Reconnection can take place right away, with 28 days granted to negotiate the plan.

  • This reconnection plan will include consultation with a registered party such as the Energy and Water Ombudsman to ensure that it is fair both for the retailer and the consumer.

  • This will include a "direct assistance package" which could include prepayments or rationing - referred to as "supply capacity controls" - such as limits on the amount of electricity used during particular hours, particular appliances or both.

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