AER report reveals hardship program deficiencies

A rule change to protect vulnerable customers has been put forward following a “damning report” by the Australian Energy Regulator (AER), Federal Energy Minister Josh Frydenberg has announced.

The AER’s 2017 Hardship Policy Review looks at the performance of energy retailers in managing their hardship programs.

The review found most retailers had deficiencies in at least some aspect of their hardship policy and its implementation.

It also found a wide variation in the quality of hardship policies, with many lacking specifics on how a retailer will act and what assistance they will provide to a customer.

“Despite high levels of energy debt across most jurisdictions, the proportion of customers on hardship programs remains low, with most jurisdictions reporting less than one per cent of customers on hardship programs,” Mr Frydenberg said.

“The AER also found only 27 per cent of electricity customers exiting hardship programs did so successfully by paying off their debt.

“Late last year, a retailer was fined $40,000 for wrongfully disconnecting the premises of a vulnerable customer after failing to offer hardship assistance.”

The AER is auditing the hardship processes of selected retailers and is investigating potential breaches of hardship and disconnection requirements.

Businesses must have systems and processes to monitor their obligations. Audits of hardship processes will assess the adequacy of these systems in ensuring these important obligations are met.

“Energy affordability is a significant issue for many Australian households,” AER chair Paula Conboy said.

“Customers are entitled to assistance from a retailer if they are having trouble with their energy bills and we are working to ensure they are receiving that.”

Ms Conboy said the Retail Law provides protections for customers experiencing financial difficulties, including requirements that disconnection for non-payment only occurs as a last resort.

Under retailer hardship programs, customers who are in compliance with the agreement cannot be disconnected.

“Rising electricity disconnections, fewer customers successfully completing hardship programs and high debt levels for customers not in these programs are all strong indicators there is more work to be done to ensure customers get the required assistance,” Ms Conboy said.

Building on the findings of its 2017 Hardship Policy Review, the AER has submitted a rule change request to the Australian Energy Market Commission (AEMC) that would develop a binding Customer Hardship Policy Guideline as a single point of reference for industry on how the hardship obligations should be applied, and provide customers with a clear understanding of their rights and entitlements.