Continued hardship being experienced by many says community help sector

At our first community sector roundtable for the year, the community support sector told the Essential Services Commission that in the first few months of 2022 they have seen ongoing hardship being experienced by many in the community, and emphasised the importance for customers to have access to utility concessions and consistent financial hardship support from energy retailers.

Representatives from 20 consumer and community support organisations attended last week’s roundtable meeting.

The group also discussed the preliminary findings from the review of the implementation of the payment difficulty framework in energy.

This was our eleventh community sector roundtable since April 2020, with the next planned for June 2022.

Update from the community sector

The community sector outlined the trends they are currently seeing in their work, including:

• inconsistency of financial hardship support from energy retailers, and the importance of access to concessions
• people with complex needs continuing to fall through the gaps and not necessarily receiving the support needed
• the rising cost of living affecting many in the community, particularly groups such as people living with a disability and older people
• the continuined long-term impacts of the pandemic
• ‘buy now, pay later’ loans being used to pay utility bills, which remains an ongoing concern for those working in financial support, particularly with debt collection recommencing
• an increase in the incidence of family violence in the community from across many of the organisations represented.

Summary of Chairperson’s notes

The roundtable has helped shape our work

Our community sector roundtables, and the conversations we have had with the community, have informed much of our work since the start of the pandemic. Some of the key pieces of work the roundtable has helped shape include:

• the pausing of disconnections though lockdown periods
• our collection of water and energy data throughout 2020 and 2021
• our review into the implementation of the payment difficulty framework
• our first strategy aimed at addressing consumer vulnerability.

Update from the commission

Since the last community sector roundtable meeting, we have:

• released the draft Victorian default offer price, which will see a small rise in the offer
• commenced our review of the water customer codes, which has also seen us embark on our second community panel
• released the new minimum feed in tariff for solar customers
• released our draft review of taxi fares, which looks at the maximum fare for an unbooked taxi
• begun reviewing our work for customers experiencing family or domestic violence, which will see us looking to improve our reference material for the energy, water and local government sectors over the next two years
• kicked off a water price review for new prices from 1 July 2023 – our second under the PREMO pricing framework designed to better reflect what customers want from their water business
• released our annual report on the performance of the Victorian Energy Upgrades program, which showed households involved with the program saved an average $230 a year.

Enforcement update

New legislation (the Essential Services Commission Compliance and Enforcement Amendment Bill) was passed by the Victorian Parliament late last year and came into effect on 1 December 2021. The Energy Legislation Amendment (Energy Fairness) Act 2021 was also passed.

The changes recognise the essential nature of energy for Victorian households and businesses. They highlight community expectations of businesses when being sold or supplied energy, and an expectation that poor conduct is appropriately deterred, prevented, or held to account.

This legislation gives us access to stronger investigatory powers, the ability to issue penalty notices and make a choice between civil litigation and criminal prosecutions in the pursuit of our regulatory enforcement function.

New criminal offences were introduced in relation to wrongful disconnections and there are new prohibitions on door-to-door sales, cold calling and using save and win-back offers.

In terms of recent enforcement action, a brief snapshot of the outcomes since our last roundtable:

• At the start of this year, Sumo paid $500,000 in penalties after alleged wrongful disconnections.
• Powercor and AusNet paid $250,000 and $280,000 respectively for allegedly failing to notify customers of planned power interruptions.
• In October, we announced Origin Energy paid more than $5 million in penalties for allegedly charging exit fees to more than 20,000 small business customers – this practice was banned in 2015.

Summary of payment difficulty framework discussion

The payment difficulty framework review preliminary findings

We have started our first review of the framework, with a focus on its implementation over the past few years. We’ve released our approach paper and are currently developing our findings report. We will release that report in May.

Some of the findings included that:

• more customers are receiving assistance and the assistance provided appears to be appropriate
• customer experiences have indicated:
  • there are clearer structured plans, flexible for customers
  • there is a decrease in pressure from retailers for unaffordable payment plans
  • an increase in customer awareness
  • the framework has increased awareness within retailers of customers experiencing vulnerability.
• disconnections have decreased since the framework, but we recognise that the pandemic also coincided with the reduction in disconnections, as retailers stopped disconnections during lockdowns
• customers who can pay for their ongoing usage are managing their arrears well – the framework appears to support these customers’ experience. We have seen an increase in these customers receiving assistance, and their debt levels appear to be reasonably managed.

While there have been some positive findings, we have also identified some areas for improvement, including:

• energy consumers’ knowledge and understanding of the framework varies
• the appropriateness and timing of retailer communication with customers, which is variable
• levels of empathy of retailer call centre staff towards consumers during customer interactions, which varies across the sector
• the focus of tailored assistance, which has been on payment plans, but lowering energy costs and energy usage are also key to supporting customers
• the higher level of arrears of residential energy customers, despite standard assistance aiming to help them avoid getting to arrears
• many customers receiving tailored assistance appearing to not be receiving concessions.

Discussion on the findings

Representatives had the chance to discuss the findings with the group. Key themes from the discussion included that:

• energy, and the stress it can cause, is one part of the lives of customers – the focus should be given to ensuring retailers communicate relevant information at a time and a place suits the customer
• there are increasing energy debts for customers who cannot pay for ongoing use
• the review should include mechanisms to ensure compliance with the payment difficulty framework.