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Victoria energy disconnections down but retailers still playing rough

The state's Payment Difficulty Framework is having the desired effect but the energy sector is still wielding a big stick.

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Last updated: 16 July 2019

Need to know

  • Victoria's Payment Difficulty Framework is working, but not as well as it could.
  • The six-month hold on energy debts doesn't always solve the problem. 
  • Debt collectors are threatening homes as collateral for overdue bills. 

Victoria's plan to reduce energy disconnections in the state is working pretty well so far, but energy retailers could do a lot better when dealing with hard-pressed customers.

That's the key finding in a new report from Melbourne-based Consumer Action Law Centre's (Consumer Action), which makes the case that Victoria's Payment Difficulty Framework has significantly reduced the number of disconnections since it came into effect in January this year and that overdue bills of $3000 or more are less common.

In 2015, energy disconnections hit an 18-year high in Victoria.

The way some energy retailers respond to customers in need of assistance is concerning

But energy retailers can still play hard ball with customers who don't have the means to keep the lights on, according to Consumer Action CEO Gerard Brody.

"The way some energy retailers respond to customers in need of assistance is concerning. Threats of service disconnection are still rife even if actual disconnections are down. The process for accessing government assistance such as Utility Relief Grants is still too complex for many customers," Brody says.  

"Worryingly, many people who contacted the National Debt Helpline over the past six months said their retailers had placed them on payment plans, but that they still could not afford the agreed repayments. This indicates that there is work for Victoria's energy regulator to do in order to hold energy companies to account."

Under the Payment Difficulty Framework, energy debts can be put on hold for six months, but many Victorian consumers are finding that six months isn't enough to reverse their economic fortunes.

"If customers are still unable to get the help they need to get out of arrears, they will be at risk of disconnection," Brody says.

Worse, unpaid bills are often passed along to debt collectors, who can use bankruptcy as a debt collection tool. It means a debtor's home can be put on the line over an unpaid energy bill.

Victoria's energy customer relief regime is part of a growing pushback against profit-minded energy retailers, including a proposed ban on pay-on-time discounts that often function as late payment fees.

Brody says Consumer Action welcomes the Essential Services Commission (ESC) plan to prioritise compliance and enforcement work on the Payment Difficulty Framework in 2019–20 to ensure that energy retailers are playing by the rules.

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