Energy affordability, cost of living, pandemic financial impacts drive calls to community support services
05 August 2022
We hosted our second community sector roundtable for 2022 in late July. Our chairperson commissioner Kate Symons hosted the event, marking our 12th community sector roundtable since April 2020.
We were joined by attendees from more than 12 organisations working across a range of issues and disciplines to advocate for and support Victorian consumers, including those experiencing vulnerability. The group discussed key trends and concerns facing Victorians against a new backdrop of higher energy prices, rising inflation and the increasing cost of living. Attendees shared valuable insights around how Victorians are experiencing the shifting economic environment, focussing on the sectors the commission regulates.
Community sector update and observations
High volumes of calls regarding energy prices, energy affordability and energy debts
Ongoing financial hardship from the pandemic is seeing people who have never used community support services before seek help
Some Victorians have considerable debts and are not able to manage the increased cost of living across mortgages, utilities, food, petrol
Increasing calls requesting help regarding mortgages and ratepayer arrears
Some households have ratepayer arrears dwarfing mortgage bills
Some households are prioritising utility bills over rent
Businesses need to consider customers affected by family violence when providing payment assistance
Low awareness of available energy grants and concessions and how to access these
Concerns around energy retailer back billing conduct
Concerns about use of “buy now, pay later” in the context of energy bills and possible impact on consumers experiencing vulnerability
Summary of chairperson’s address
We know the rising cost of living can mean difficult decisions for some Victorians. We know that people on fixed low incomes, people who are unable to work, underemployed or in insecure work, and people who are affected by family violence, have less ability to weather cost of living increases in ways that mean they don’t fall further behind.
Today is a timely opportunity to bring together again a diversity of voices and experiences to discuss our pressing mutual interest in supporting Victorians through these latest events, particularly those experiencing vulnerability.
Your insights have helped inform our work – from the payment difficulty review, better practice guides to support customers affected by family violence, enforcement actions to protect the rights of customers experiencing vulnerability, and our pricing reviews.
Update from the commission
Local government
In June, the government introduced legislation into Parliament requiring councils to implement fairer financial hardship policies. The bill explicitly defines financial hardship and requires early engagement with ratepayers by councils. Councils would also no longer be able to use debt collectors or pursue legal action unless ratepayers refuse to engage, and all other options have been exhausted.
Under the proposed legislation, the Minister will seek the commission’s advice before setting a maximum amount of interest levied on unpaid rates and charges. The Minster will also consult with us on guidelines for councils to follow when engaging with ratepayers in hardship and collecting unpaid rates or debts.
Water
We are preparing for the 2023 water price review which will affect 14 water businesses across metropolitan, regional, and rural Victoria.
This time we introduced specific obligations for water businesses about their engagement with customers experiencing vulnerability, and with First Nations peoples.
The water businesses are in the final stages of consultation with their customers and community on the outcomes and prices they will submit to us for review.
We will work towards a draft decision from December onwards and the new prices will come into effect from 1 July 2023.
We are reviewing the effectiveness of the family violence provisions in the water customer service codes. Over the coming months we will speak with people who have lived experience of family violence, financial counsellors and organisations who work with people experiencing family violence, as well as water businesses.
Compliance and enforcement priorities in energy
We released our 2022-23 energy compliance and enforcement priorities. These focus on wrongful disconnections of customers, explicit informed consent, the payment difficulty framework, best offer messages, embedded networks’ fees and charges, and distributor’s guaranteed service level compensation payments. There are ongoing priorities for customers experiencing vulnerability – including protecting the safety of Victorians affected by family violence.
Victorian Energy Upgrades program
In recognition of the critical role consumers play in the ongoing success of the Victorian Energy Upgrades program, the government is introducing important program reforms, starting with an enforceable code of conduct that came into effect on 1 July.
The code upholds critical protections for consumers when it comes to marketing and sales of the program, contracts, communication, installation, after sale follow-up and customer dispute resolution, in step with Australian Consumer Law.
The code of conduct is a welcome addition to the program. It puts consumer welfare and customer service at the centre the program. It is important recognition that this is a program designed to provide immediate and long-term benefits to Victorians through energy cost savings and greenhouse gas emission reductions.
Energy market
Higher wholesale energy prices and power plant closures appear to be impacting the ability of some retailers to operate in the market.
Two retailers have exited the Victorian market in the last two months triggering the Retailer of Last Resort process to ensure that all customers are automatically transferred to another retailer and there is no disruption to a customer’s gas or electricity supply.
We recognise that consumers may be concerned about their ongoing energy supply or their ability to pay for their energy usage as the market enters a period of higher energy prices, and energy retailers adjust their products, services, and messaging.
We are monitoring the behaviour of energy businesses and will not hesitate to enforce the strong protections that exist for the benefit of Victorian energy consumers.
It is important that consumers know their rights and what they should expect from energy businesses – see the statement we issued on 1 June for useful consumer information.
Summary of payment difficulty framework review update
The energy payment difficulty framework is a set of rules designed to protect and support residential customers that are anticipating or facing payment difficulty. Its implementation has coincided with a significant fall in disconnections
The purpose of our review was to explore how retailers are implementing the framework to meet its objectives over the last two years.
We published our findings report in May. It presents our analysis of stakeholder feedback, retailer data, consumers insights research, and call recordings between retailers and customers receiving payment assistance gathered from September 2021 to May 2022.
The findings highlight clear opportunities for retailers to improve their processes under the framework to increase the effectiveness of their support to customers experiencing payment difficulties.
Next steps: better practice program
In this final phase of the review, we are exploring approaches and actions the sector can take to improve the way the framework is implemented on behalf of consumers. We are engaging with stakeholders on better practices from retailers to improve consumer outcomes.
Starting from July 28, we will host a series of workshops to highlight and explore good practice approaches when helping customers under the payment difficulty framework.
