Problems with Payment – Experiences in the Energy Sector

Gerard Brody CEO

Prices go up, incomes go down

!  Energy prices have increased 45% in the last 3 years

!  Forecast to keep rising !  CPI has increased 13% in the last 5

years !  Low income households spend 12% of

income on energy (compared to 5.3% for other households)

!  Pensions not keeping pace, impact of Federal Budget

Problems with payment

!  29% increase in people in hardship programs

!  93% increase in people denied access to hardship

!  Debt on entry = $808 !  Debt on exit = $1,103 !  Disconnections going up !  Threats of disconnection higher !  Seeking payday loans to make

payment

Our report

!  Research of consumer experiences with capacity to pay from the MoneyHelp line

!  13 case studies of vulnerable consumers

!  Assessment of retailer practices and recommendations for improvement

!  Expected release in July

Summary findings

!  Government income + private rental = low capacity to pay

!  Energy retailers want more than people can pay

!  Inability to keep up a payment plan leads to demands for full payment, debt collection or disconnection

!  Early and proactive communication is the key

Case study: Alyce

!  37 years old on a sole parent pension !  $3,500 energy debt !  $40/fortnight payment plan without

consulting Alyce !  Alyce was not able to afford and fell

behind !  Served with a disconnection notice

unless she paid $140/fortnight

Case study: Ryan

!  35 years old, $600 Newstart a fortnight

!  $35/week payment plan, but accrued $1,500 debt

!  $40/week payment plan rejected and given 2 months to pay

!  Referred to EWOV, after which $40/week payment plan was accepted

Case study: Rosemary

!  77 years old on a carer’s allowance !  On a $32/week payment plan for gas !  Received $1,500 gas bill !  Disconnection threatened and $60/

week payment plan offered !  Told to not use the gas heating !  Borrowed $700 to pay down debt and

now pays $60/week off debt !  Bill still acrruing

Case study: Barbara

!  48 years old on a carer’s pension !  $2,500 energy debt !  $25/week payment plan increased to

$90/week !  Removed from hardship program after

becoming upset with customer rep !  Demanded full payment and required

to see a financial counsellor to avoid disonnection

A new approach

1.  New practices and policies 2.  Early identification 3.  Easy and consistent access to specialist

hardship team 4.  Community hub model 5.  Internal training 6.  Consistent, realistic and respectful

assessment of capacity to pay 7.  Concessions and energy efficiency 8.  Regular internal review