Highlighting the escalating cost-of-living crisis, the ACCC says the number of Australian households struggling to pay electricity bills surged by 18% in the year to September 30, 2023 with 273,337 households either receiving concessions, on payment plans, or both.
Despite government concessions amounting to billions of dollars, rising electricity bills are causing many households to continue to fall behind on payments.
The ACCC noted that the rise in households on payment plans occurred even as wholesale electricity prices fell in 2023, a reduction yet to be reflected in household bills, which are typically based on prior production costs.
The federal government expects electricity bills to decrease, mirroring the decline in wholesale prices, potentially allowing households to address outstanding debts. Federal Energy Minister Chris Bowen emphasised the government's fiscal support, stating, "We know that many people are under pressure – that’s why we’ve delivered further energy rebates to provide more cost-of-living help to more Australians.”
Bowen highlighted the upcoming July 1 $300 power bill rebate. However, economists warn that the government’s relief measures, announced in the May budget, might stimulate the economy and further fuel inflation, prompting the Reserve Bank to consider raising interest rates.
Australian Energy Regulator steps in
The Australian Energy Regulator (AER) and its Victorian counterpart have intensified enforcement actions against non-compliant energy retailers with Australian law requiring retailers to offer payment plans to those unable to pay, along with strict rules around disconnections.
Energy retailers, aware of legal requirements and customer relations, have pledged significant funds to support vulnerable customers.
However, the cost of carrying interest-free debt poses a challenge to the industry. The AER considers these costs when setting the default market offer, the maximum annual charge for households, which incorporates wholesale electricity costs, transportation, and regulatory compliance.