AER Calls for Energy Retailers to Focus on Support for Customers in Hardship

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During COVID, we saw governments enacting laws to support people suffering financial hardship due to the pandemic. We saw this in relation to tenancy evictions and the like. Despite the emergence from lockdowns in several states, people are still doing it tough. Debt, for many people, is not easy to pay down. That position will not change soon.

In a recent publication on its website, the Australian Energy Regulator (AER) has called on energy retailers to provide “better” support to customers in hardship. The AER released its Annual Retail Markets Report 2020/21 on 30 November (2021) and noted that despite the fall in retail energy prices for households for the year 20/21, energy debt had risen by 12%, and the amount of the debt of customers entering the various retailer’s hardship programs had risen by 21%.

The article also noted that of the 182,665 households who were paying off energy debt (an increase of 8,444 from the previous year) that this figure did not take into account customers who were classified as hardship customers. The number of hardship customers actually fell in the same period from 72,882 to 65,885. That has caused some alarm.

All energy retailers are aware of their legal obligations in relation to hardship policy. This drop in hardship customers when energy debt is increasing is of serious concern to the AER. Whilst the legal obligations for energy retailers are clear, it may be that retail energy company’s hardship provisions and processes need to be audited and reviewed. The figures above may reasonably be construed by the AER as counter-intuitive.

The AER noted aspects of some hardship programs, such as financial counselling, face to face support, and energy efficiency audits, that would assist in the ongoing management of such customers’ accounts. They also noted that their compliance and enforcement priorities for 2021/22 would include a strong focus on reducing energy debts from hardship customers and customers with debt alike.

At present, the AER has thrown the onus onto retailers to ensure their hardship programs are effective in reducing energy customers debt. Whilst energy retailers are aware of their obligations in this endeavour, the call from the AER is for retailers to put a stronger focus on this issue.

No doubt there will be audits in time to come and the retailers who have not been proactive in this space may be in for some closer scrutiny and contribute to ultimately bringing about mores stringent obligations in the future across the sector. Compliance managers should take heed.

An energy efficiency audit of hardship customers (and any customer paying down debt) usage would be a logical next step for any retailer. This would not only reduce customer energy usage, it would slow down the increase of future customer debt. The decrease in customers on hardship programs at a time of markedly increased customer debt will no doubt be the subject of greater scrutiny and investigation over the remaining part of the 2021/22 period.

Retailers would be well advised to heed the call of the AER before the bright light of scrutiny starts beaming down. Making financial counselling available and conducting energy efficiency audits for hardship customers (and those with energy debts) might be a good place to start.

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