Retail markets report reveals customers’ energy debt

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The Australian Energy Regulator’s (AER) Annual retail markets report 2022-23 has revealed more customers have accumulated energy debt since retail prices started rising last year.

From June 2022 to June 2023, prices for residential electricity increased by between 12% and 28% in the ACT, NSW, Queensland, South Australia and Tasmania, and between 5% and 11% in Victoria.

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With energy affordability decreasing, the proportion of residential customers with energy debt increased from 2.5% to 2.9%, and the proportion on hardship programs increased from 1.1% to 1.4%—both at their highest levels in the past five years.

Although retailers are identifying vulnerable customers earlier or with less debt (the average debt on entry to a hardship program decreased by 29% for both electricity and gas), customers are still accruing debt while on a hardship program and the number of customers exiting hardship programs by clearing their debt is at its lowest level since 2018-19.

The trend was reversed for small businesses, with the proportion of small businesses with energy debt decreasing from 3.2% to 3.0% but their average debt increasing by 15%.

The report shows the proportion of residential electricity customers on market contracts (an advertised plan that the consumer chooses or negotiates with their retailer) at a five-year high of 79%, with customers able to save up to 11% on their annual electricity bills in some areas by switching from a standard contract (a plan given to the consumer by their retailer by default) to a market contract.

As the sharp rise in wholesale energy costs over 2022 flow-on to increased retail energy prices, AER chair Clare Savage urged consumers to shop around and seek help if they need it.

“We recognise that now is a difficult time as Australians face multiple cost-of-living pressures and that many will need continued support,” Savage said.

“We strongly advise consumers to regularly compare available offers through sites such as Energy Made Easy and Victorian Energy Compare, consider switching if they can find a better offer, and contact their retailer immediately if they are struggling with their energy bill.

“As part of the AER’s Better Bills Guideline, consumers should also see a ‘better offer’ message at least once every 100 days on the front page of their energy bill and should consider switching if they can find a better offer for their circumstances with their current or an alternative retailer.”

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Savage also acknowledged the importance of continued support for vulnerable energy consumers after energy ministers last week committed to progress work on a package of reforms proposed by the AER and industry to address energy vulnerability.

“This package of proposed reforms has been designed to address persistent challenges faced by consumers, including energy debt and hardship, and we thank stakeholders, energy ministers and jurisdictions for their commitment to progress this work,” she said.

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